Axis Bank reported a sharp rise in gross slippages during Q1 FY26, but clarified that a significant portion of the increase was due to technical accounting adjustments.
Key highlights:
- Gross slippages in Q1 FY26 stood at ₹8,200 crore, up from ₹4,805 crore in Q4 FY25 and ₹4,793 crore in Q1 FY25.
- Of the total, ₹2,709 crore of gross slippages were attributable to technical impact, which refers to accounting-related adjustments rather than deterioration of asset quality.
- After adjusting for technical impact, gross slippages for the quarter stood at ₹5,491 crore.
- Net slippages attributable to technical impact were ₹1,861 crore; adjusted net slippages stood at ₹4,192 crore.
- Net slippages further adjusted for recoveries from the written-off pool and technical impact were ₹3,288 crore, compared to ₹2,700 crore in Q1 FY25 and ₹1,079 crore in Q4 FY25.
Segment-wise adjusted net slippages:
- Retail: ₹3,636 crore (Q1FY25: ₹2,456 crore | Q4FY25: ₹2,297 crore)
- CBG (Commercial Banking Group): negative ₹14 crore (Q1FY25: ₹13 crore | Q4FY25: ₹5 crore)
- WBCG (Wholesale Banking Group): negative ₹334 crore (Q1FY25: ₹231 crore | Q4FY25: negative ₹1,223 crore)
Impact on asset quality ratios (adjusted for technical impact):
- Gross NPA ratio adjusted: 1.41%, down 13 bps YoY.
- Net NPA ratio adjusted: 0.36%, up 2 bps YoY and 3 bps QoQ.
Profitability impact:
- The technical impact adversely affected PAT by ₹614 crore, ROA by 15 bps, and ROE by 1.4% in Q1.
- Importantly, the bank noted that 80% of contracts that slipped due to technical impact and remain NPAs as of June 30, 2025 are fully secured, which should minimize long-term economic loss.
In summary, while headline gross slippages rose sharply due to technical factors, adjusted numbers indicate more stable underlying asset quality. The bank remains confident that the actual credit losses will be limited given the security cover on the impacted accounts.
TOPICS:
Axis Bank