Axis Bank Limited — Credit Ratings, 20-11-2024: Credit Rating

Axis Bank Limited reported robust financial performance for H1 FY2025. Total income increased to ₹37,919 crore, reflecting strong operational momentum. Profit after tax stood at ₹12,952 crore, up from ₹9,580 crore in FY2023, underscoring a significant year-over-year improvement driven by enhanced net interest margins and a solid retail loan book.

The bank's capital position remains healthy, with a Common Equity Tier I (CET I) ratio of 14.12%. Gross non-performing assets (NPAs) improved to 1.53%, down from 2.16% in FY2023, indicating successful asset quality management amidst a challenging economic backdrop. The decline in fresh NPA generation reflects the efficacy of underlying credit controls and economic recovery.

Operational costs rose, primarily due to expansion and increased staffing, yet the overall cost management strategy appears effective given sustained profitability. The bank's liquidity position is strong, marked by a daily average liquidity coverage ratio of 115%, which positions it well for upcoming challenges and financing opportunities.

Moving forward, Axis Bank is likely to continue focusing on expanding its retail lending portfolio while maintaining its asset quality. Given the strong earnings growth and capital stability, investors may consider holding their positions, acknowledging positive operational outlooks and manageable risks related to asset quality.

In terms of credit ratings, ICRA reaffirmed its ratings, maintaining a stable outlook for its Basel III Tier I Bonds, signaling confidence in the bank's financial health and resilience.