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Q3 FY26 Earnings Outlook: Analysts Project Profit Dip
Axis Bank is poised to report its unaudited financial results for the quarter ended December 31, 2025 (Q3 FY26) on January 26, 2026. Analyst expectations suggest a subdued earnings performance on a year-on-year basis. The consensus forecast indicates a potential double-digit percentage decrease in net profit, driven by limited net interest income (NII) growth and higher provisions. Specifically, Nomura anticipates a 6% year-on-year profit decline to ₹5,900 crore, while ICICI Securities projects a 3% drop to ₹6,121 crore. Elara Capital forecasts a more significant 16% decrease to ₹5,299.9 crore, and Kotak Institutional Equities estimates a 19.7% fall to ₹5,064.7 crore.
Operational Performance and Growth Drivers
Provisional business updates released on January 5, 2026, reveal a robust expansion in the bank's balance sheet. Gross advances reportedly increased by 14.1% year-on-year to ₹11.70 lakh crore, while total deposits saw a 15.0% year-on-year rise, reaching ₹12.60 lakh crore as of December 31, 2025. CASA deposits grew 13.9% YoY, with term deposits increasing by 15.8% YoY, indicating healthy liability mobilization amidst competitive banking conditions. However, Net Interest Income (NII) is expected to show modest growth, with projections ranging from 2.5% to 3% year-on-year. Net Interest Margins (NIMs) are anticipated to face pressure, with expectations of a sequential decline of approximately 5 to 8 basis points, potentially settling around 3.5% to 3.7%. This contrasts with the reported 3.93% NIM for Q3 FY25.
Asset Quality and Provisioning Concerns
Analysts are closely monitoring asset quality trends, with expectations of an increase in gross slippages and provisions for the quarter. ICICI Securities forecasts slippages to reach ₹6,800 crore, a significant annual increase, while Kotak Institutional Equities estimates ₹6,300 crore. Provisions are also expected to rise substantially year-on-year; Elara Capital projects a 55.4% increase, and Kotak Institutional Equities anticipates a 63% jump to ₹3,511.6 crore. Management commentary on asset quality, particularly concerning the unsecured segment and agricultural loans, will be crucial for investors.
Sectoral Context and Market Sentiment
The broader Indian banking sector is expected to deliver stable performance in Q3 FY26, rather than a blockbuster quarter, with a generally positive outlook. Loan growth is projected at approximately 12.9% year-on-year, with deposit growth tracking slightly lower at 10.9%. While NIMs are expected to remain largely stable, rate cuts might exert pressure on yields, though a lower cost of funds is anticipated due to better liquidity and deposit repricing. Asset quality continues to show improvement, with Gross NPAs at multi-decade lows. The market capitalization of Indian banks saw a rise in the preceding quarter (October-December 2025) supported by festive demand and tax adjustments.
Live Market Snapshot
As of January 22, 2026, Axis Bank shares were trading at approximately ₹1,277.50 on the NSE, with a trading volume of 3,941 shares. The company holds a market capitalization of around ₹3,98,971 crore, and its trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio stands at approximately 15.35. The stock's 52-week high and low were recorded at ₹1,327 and ₹934, respectively.