Axis Bank reported provisional business growth for the September 2026 quarter, with advances rising 22.7% and deposits 20.7%. While the use of RBI’s FCNR(B) swap facility aided liquidity, investors should track whether the bank can maintain high asset quality while deploying these funds.
Axis Bank has reported a strong expansion in its business operations for the second quarter of the financial year 2027, which ended on September 30, 2026. The private lender’s gross advances reached ₹13.85 lakh crore, reflecting a 22.7% increase compared to the same period last year. Total deposits also recorded a solid performance, growing 20.7% year-on-year to reach ₹14.52 lakh crore.
This growth in the balance sheet was significantly influenced by the bank’s tactical use of the Reserve Bank of India’s foreign currency swap window. Axis Bank successfully mobilized $10.62 billion in FCNR(B) deposits, which are foreign currency deposits held by non-resident Indians. By securing these funds, the bank was able to improve its liquidity and reduce its reliance on higher-cost domestic non-retail term deposits, which saw a decline of 8.6% sequentially. This strategy is aimed at optimizing the cost of funds, as cheaper wholesale funding can help protect profit margins.
For investors, it is important to distinguish between headline growth and core banking activity. While the reported gross advances rose by 22.7%, the bank noted that its core gross advances growth stood at 18.8% when excluding specific international leveraging facilities. This indicates that while the balance sheet growth is substantial, a portion of the surge is tied to international liquidity operations rather than just domestic loan demand.
While the current results highlight effective liquidity management, there are specific risks that investors may monitor. The large influx of liquidity from the swap facility creates a scenario where the bank must deploy these funds efficiently. A common risk for banks with excess liquidity is the temptation to increase lending too quickly, which can lead to asset quality issues if credit standards are relaxed. Additionally, the bank's strategy relies on the availability of the RBI’s swap window; any future withdrawal or changes to this facility could impact the bank's cost of funds and its ability to maintain such growth rates.
Following the announcement, shares of Axis Bank were trading near ₹1,234 as of October 5, 2026. The market reaction reflects the bank's ability to maintain high deposit and credit growth despite a competitive banking environment. Looking ahead, the primary monitorables for shareholders will be the bank's ability to maintain asset quality as it deploys the new capital and the sustainability of its deposit mix in the coming quarters.