Banks - India: India IG financials - FY26: overall better, but downgrade AXSBIN AT1 to UW

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Banks - India: India IG financials - FY26: overall better, but downgrade AXSBIN AT1 to UW

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Banks - India

India IG financials - FY26: overall better,

but downgrade AXSBIN AT1 to UW

Credit Analysis

Overall improved fundamentals; AXSBIN outlier 18 May 2026

The four India banks under our coverage reported better fundamentals in FY26, except Global Emerging Markets | Corporate

AXSBIN which saw weaker trends due to high provisions (Exhibit 1). The YoY loan growth Credit

moderately picked up, which could largely mitigate the margin pressure. Capitalization Asia | India

Banksand asset quality both improved, with private banks reporting better fundamentals than

SBIIN (the only PSB under our coverage). From a forward-looking perspective, we believe Lefu Li, CFA

the implication of the West Asia conflict is negative for Asia banks but could be neutral Research Analyst

Merrill Lynch (Hong Kong)

for Indian banks. We also expect to see higher USD supply for refinancing for the rest of +852 3508 2142

2026. For capital bond we still find value in HDFCB 3.7 Perp call in Aug.’26 (HDFC AT1, lefu.li@bofa.com

OW), but downgrade AXSBIN 4.1 Perp call in Sep’26 (AXSBIN AT1) from OW to UW Rachna Jain, CFA Research Analyst

because of the bank’s weaker fundamentals. For POWFIN and RECLIN, the FY26 results Merrill Lynch (Singapore)

were generally stable, with POWFIN reporting a stronger operating trend than RECLIN. +65 6678 2972 rachna.jain2@bofa.com

Overall, we still prefer both their seniors to SBIIN’s senior bonds, while we are still OW

HDFCB’29 on its better valuation than other bank’s seniors.

AcronymsDowngrade AXSBIN AT1 to UW: provisions, weak results

We downgrade AXSBIN AT1 mainly on its fundamental weakness that has not been AXSBIN: Axis Bank Ltd

priced in.