Axis Bank Grapples with Sluggish Loan Growth and Rising Asset Quality Risks

Axis Bank is facing a lot of issues as its loan growth slows down and asset quality deteriorates, reflecting broader economic headwinds and sectoral pressures. It reported a net profit of ₹63.04 billion for Q3 FY25, missing the market expectation of ₹65.16 billion.

 

The growth in loans slowed down to 9% year-on-year from 11% in the previous quarter. This was due to the decelerating credit demand. Adding to it was the 100% rise in provisions for bad loans to ₹21.56 billion, as the bank braced for a potential default.

 

Gross NPA rose to 1.46%, with this thereby increasing the risk in the retail and corporate portfolios of the bank. The management at Axis Bank, however, remained optimistic about the long term revival. On his part, CEO Amitabh Chaudhry warned that normalization of asset quality in the retail book may still take some more quarters.

 

The market reacted very sharply on this and Axis Bank shares dipped to their 14-month low, raising doubts about its growth trajectory. Analysts feel there is a need for strong risk management and diversified loan portfolios to overcome the challenges.

 

Source: Reuters