Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Axis Bank Ltd (NSE: AXISBANK) Q4 2026 Earnings Call dated Apr. 25, 2026
Corporate Participants:
Amitabh Chaudhry — Managing Director and Chief Executive Officer
Neeraj Gambhir — Executive Director
Puneet Sharma — Chief Financial Officer
Vijay Mulbagal — Group Executive
Munish Sharda — Executive Director
Analysts:
Chintan Joshi — Analyst
Unidentified Participant
Rikin Shah — Analyst
Kunal Shah — Analyst
Unidentified Participant
Mahesh Balasubramanian — Analyst
Mahrukh Adajania — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Access bank conference call to discuss the bank’s financial results for the quarter ended as on 31st March 2026. Participation in the conference call is by invitation only. Access bank reserves the right to block access to any person to whom an invitation has not been sent. Unauthorized dissemination of the contents of the proceeding of the call is strictly prohibited and prior explicit permission and written approval of Access bank is imperative.
As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions at the end of the briefing session. Should you need assistance during the conference call, please signal the operator by pressing Star and then zero on your Touchstone phone. Please note that this conference is being recorded on behalf of Axis Bank. I once again welcome all the participants to the conference call. I now hand the conference over to Mr. Amitabh Chowdhury, MD and CEO.
Thank you. And over to you sir.
Amitabh Chaudhry — Managing Director and Chief Executive Officer
Thank you, Sagar. We welcome you all to a discussion on Access Bank’s financial results for the quarter and financial year ended March 2020. 2026. We have on the call. Apart from Puneet, our Executive Director Subrat Monty Munish, Sharda, Neeraj, Kambir and other members of the leadership team financial 2026 unfolded against a complex and uncertain global macroeconomic backdrop. Elevated geopolitical tensions including tariff issues and lately the West Asia conflict continue to disrupt global supply chains, influence capital flows and add volatility to markets worldwide.
Indian economy has shown resilience amid this uncertainty so far. In this environment, Axis bank remains firmly focused on disciplined execution balancing growth with thoughtfulness while continuing to build momentum in our chosen areas of focus. We made strong progress this quarter in building a resilient all with a franchise, strengthening our balance sheet, focusing on our customers, improving efficiency and increasing active intensity across the franchise without diluting risk standards. Please Refer to slide 3 for more details on the House of GPS.
Now let me talk briefly about the progress we have made on each pillar of our GPS strategy. Starting with growth. We sustained the momentum from the previous quarter with strong all around growth across segments. Our total advances grew 6% quarter on quarter and 19% year on year within which wholesale grew 38% SV24 and retail 8% on year on year basis. Wholesale banking has evolved from a balance sheet centric model to an ecosystem led approach driving diversified high quality growth and relatively strong cycle segments.
We have deepened relationships that enhance our share of wallet improve risk visibility and deliver the planned rack. Our SME franchise continues to grow strongly. We have built a diversified gambler portfolio and have improved our yields through data driven credit decisions, simplified products and digitized operations in retail. Our disbursement growth remains strong and risk calibrated centered on credit tested customers, strengthened underwriting discipline and balanced scaling across proprietary and partner led distribution channels.
Moving on to the deposits we continue to deliver faster than the industry growth in medium to long term year on year on MEV and QAB basis, total deposits grew 14% and 13%. Term deposits grew 16 and 15, CA grew 11 and 10 and SA grew 11 and 10 respectively quarter on quarter on MBB and QB basis, total deposits grew 6 and 2, term deposits grew 5 and 3, CA7 and 3 and SA grew 7 and 2% respectively. Total CASA deposits increased by 7% quarter on quarter on a mean basis resulting in 48 basis points improvement in CASA ratio.
Our cost of deposits declined by 46 basis points year on year and 4 basis points quarter on quarter, underscoring the strength of our funding strategy and disciplined execution. There is ongoing work on improving the deposit quality through deeper grammarization with an emphasis on building more stable liabilities mix to enhance resilience across cycles. Our new TO bank franchise continues to scale with a sustained improvement in quality. Newly acquired customers are maintaining meaningfully higher average balances with NTP average balances of 53% year on year reflecting the continued impact of premium led sourcing and tighter conversion discipline.
NTP product per customer has improved by 24% year on year due to better quality acquisitions. Our existing TO bank engine has continued to strengthen with our ETB salary book growing 18% year on year underscoring steady improvement in corporate salary segment with higher wallet share and customer lifetime value. Burgundy continues to be our driver of premaritization with assets under management up 14% year on year. The strength and consistency of our proposition was reaffirmed with Burgundy Private being named India’s Best for Next Gen at the Euromoney Global Private Banking Awards 2025 for the third year in a row on profitability, we focused on structurally improving the quality of earnings through consistent and sustainable delivery supported by ongoing improvements in operating efficiency.
Our cost to assets declined to 2.28% down 18 basis points year on year through improvement in operational productivity. While we added 400 branches during the year, our total workforce declined by 3% year on year driven by technology led efficiency gains at both employee and branch levels. Our consolidated quarter four financial year 26 ROE was 1.64% and ROE was 15.15%.
Neeraj Gambhir — Executive Director
On
Amitabh Chaudhry — Managing Director and Chief Executive Officer
Sustainability, we stay focused on quality, balance sheet resilience, building future ready technology platforms and investing in people and capabilities to deliver sustainable outcomes. At scale, our GNPA was at 1.23% declining 17 basis points quarter on quarter and 5 basis points year on year while the net credit cost was at 0.37% down 13 basis points year on year and 39 basis points quarter on quarter. I want to specifically highlight the strong progress on AI initiatives across Axis Bank. Please refer to slides 5 to 7 for more than this.
Through Axiom, our bespoke AI operating model, we are building an AI led customer centric bank that’s transforming the customer touch points, employee productivity and code process at enterprise scale. We are the only ISO 42001 certified DSI organization globally. I repeat, globally. ISO 42001 is the first international standard providing guidelines for an artificial intelligence management system. We also received the award for Best JNAI Use Case in Retail Banking at the Retail Banker International Asia Trailblazer Awards 2026.
We have a roadmap for scale up and we expect AI to drive meaningful bottom line impact over the next 18 to 24 months. Our focus remains on embedding AI responsibly, securely and in a way that supports sustainable growth. Our People first approach has been consistently recognized externally. During the year Access bank was certified by the Top Employers Institute, the only Indian private sector bank on the list, and included in the TIME Best Companies Asia Pacific list for the second consecutive year.
We were also recognized as one of India’s iconic workplaces by HD Mint and Deloitte, featured among the Best Places to Work by the Hindu and Work El and received the ATD Best Award for fostering a strategically driven talent management culture. Underpinning all of this is our unwavering focus on customers. Through our Customer Obsession initiatives Parsh, we are strengthening experience outcomes and simplifying interactions through digitization. Our retail bank NPS has improved significantly since inception and we have retained the second rank in the Cantor Retail Bank Survey for third consecutive year.
Our leadership and customer experience and analytics has also been recognized at the Annual BFSI Service Quality Excellence India Summit 2026 where Access bank won the CX Data Analytics Excellence Award and Best Omnichannel Experience Strategy. We had strong business momentum in quarter four. As a bank with clear intent, the right talent and a strong culture. This positions us well to assert our right to win and to gain more than our fair share across businesses in an environment marked by uncertainty and volatility.
Our conservatism is a strategic advantage. The choices we made during the year have strengthened our foundation and enhanced our resilience. As we step into financial year 27, we are watchful of the ongoing uncertainties. However, we stay confident in our ability to grow in a disciplined and calibrated manner faster than the industry. With that, I’ll now hand over to Puneet.
Puneet Sharma — Chief Financial Officer
Thank you Amitabh. Good evening and thank you for joining us. Before we start discussing the financial performance for Q4, FY26 and financial year 26, I’d like to clarify two items accounting for the tax item in financial year 2223, the bank acquired Citibank India Consumer Finance business from CitiBank and the NBSE consumer business from Citril, collectively called the City India Consumer Business on a going concern basis in accordance with an Independent Valuers Report, intangibles excluding goodwill amounting to 8714.24 crores were recognized in the Bank’s financial statements.
Despite retaining access to and business use of these assets as a prudent measure aimed at protecting our capacity to pay dividends, the bank opted to fully amortize these intangibles through the profit and loss account in FY22 23. Further, the bank elected not to create a deferred tax asset in 2223 on such intangibles, nor did the bank consider the deductibility of said intangibles while providing for current tax in the books until the regular assessment for the said financial year was completed during the quarter and year ended 31st March 2026.
Following the conclusion of regular assessment proceedings by the income tax authorities, tax depreciation on these intangibles was allowed. As a result, the tax expense for Q4, FY26 and full year FY26 is lower by 2,193.2 crores, which includes reversal of excess tax tax provisions made in prior years amounting to 1129.8 crores, a reduction in current year’s tax expense by 265.85 crores and recognition of a deferred tax asset of 797.55 crores. This has resulted in the effective tax rate for FY26 to become 17.25%.
The next item voluntary enhancement of the Bank’s provisioning framework for standard assets. During Q4 of FY26, the bank proactively strengthened its balance sheet by voluntary enhancing its Prudent Provisioning Framework for Standard Assets in line with our conservative risk management philosophy based on an assessment of evolving unpredictable macroeconomic and geopolitical uncertainties, the bank created an additional one time provision of 2001 crores during the quarter. This approach is aligned to our practice to enhance resilience of our balance sheet during periods of elevated uncertainty while maintaining transparency and discipline in risk governance.
This action is prudent and precautionary. I repeat, this action is prudent and precautionary in nature and does not reflect any deterioration in asset quality or adverse credit trends in the Bank’s loan or investment portfolio. As of reporting date, our core asset quality metrics remain stable and within our risk guardrails. The creation, utilization and potential reversal of this provision is governed by a Board approved framework and is calibrated using internal stress testing by the risk function under severe but plausible downside scenarios.
Based on our current assessment, this provision is considered sufficient to absorb potential incremental provisioning charge to the PNL even in the most adverse stress scenario modeled for FY27. To provide some context, the adverse stress scenario assumes average oil at over US$150 for 12 months, inflation spiking to 7.4% and the currency depreciating approximately 20% over current levels. Amongst multiple other variables that have gone into the model between the two one time items above and trading loss in the quarter due to the year end rate movements driven by extraneous factors, the net impact on the PNL of all the three variables combined is net neutral.
Moving to the salient features of the financial performance of the bank for FY26 and Q4 FY26 across operating performance, capital and liquidity Position growth across our deposit and loan franchise asset quality restructuring and provisioning. For FY26 our operating performance was stable with net interest income fee and operating expense lines. Net interest income at 56,048 crores grew 3% year on year. Net interest margin 3.69% declined 29 basis points. YOY after factoring 125 basis points pass through of the repo rate cut.
Fee at 24,444 crores grew 9% year on year. Operating expenses at 39,362 crores grew 5% YoY in line with our core revenue growth after absorption of the rate cut and despite lower trading income due to year end volatility. Cost to assets at 2.28% declined 18bps year on year. Core operating profit at 41,443 crores grew 4% year on year standard asset coverage ratio at 1.26% increased 11 basis points yoyo all provisions by GNP ratio at 166% increased 900 basis points yoy consolidated ROE at 1.46% consolidated ROE at 13.59% moving to the key metrics for Q4FY26 PAT at 7071 crores qoq growth of 9% flat year on year yoy deposits and advances grew 14% and 9% 19% respectively.
Qoq deposits growth of 6% and advances growth of 6% net interest income at 14,457 crores yoy and qoq growth of 5% and 1% respectively. The NIM for the quarter was 3.62 fee at 6561 crores yoy growth of 4% qoq growth of 8% granular fee at 92% of total fee expenses at 10,466 crores yoy growth of 6% qoq growth of 9% adjusted for employee related provisions in the current quarter due to year end rate movements and variable pay Write back In the previous quarter The YoY growth was 5% and the QoQ growth was 4%.
Cost to assets at 2.28% declined 18 basis points YoY and 5bps QoQ operating core operating profit at 10,619 crores largely flat QoQ and YoY net credit cost at 37 basis points down 13 basis points YoY and 39 basis points QoQ net credit costs excluding technical impact at 28 basis points down 22 basis points yoy and 35 basis points qoq gnp at 1.23% declined 17bps qoq 5bps yoy netnp at 0.37% declined 5bps qoq PCR at 70% flat qoq consolidated ROE at 1.64% improved 7 basis points qoq consolidated ROEE at 15.15% improved 100 basis points.
Qoq subsidiaries contribute 6 basis points to consolidated ROA and 41 basis points points to Consolidated annualized ROE for the quarter. The bank CET1 including profits for FY26 stands at 14.38%. We have net consumed 12 basis points of capital in the quarter for growth. The bank has provisions aggregating 8,244 crores including the standard asset provision created earlier in Q2 pursuant to the RPI guidance. These standard asset provisions have not been reckoned for regulatory capital computation.
Consequently, this represents an additional buffer over and above reported capital ratios, translating into an incremental capital of 53 basis points. This further reinforces the Bank’s balance sheet strength and enhances its ability to navigate uncertainty while continuing to support growth and shareholder value. We reiterate we do not need equity capital for either of our pillars. Our pillars are growth and protection. The resolution we have taken today is only an enabling resolution consistent with our practices for the prior years.
We may opportunistically evaluate issuing Tier 2 and 81 instruments based on market conditions. Yields on interest earning assets declined 5 bids QoQ cost of funds were largely flat QOQ the Bank maintains its through cycle stance of NIMS at 380 cycle measured in terms of duration starting from the last rate cut transmission date. We’ll discuss the progress on structural NIM drivers Improvement in balance sheet mix loans and investments comprised 89% of total assets at March 26. Retail and commercial banking advances comprised 67% of advances at March 26, declining 471 basis points year on year.
This is an outcome of the Bank’s conscious strategy to optimize for NII in the short term. It’s important to note retail disbursements have grown 24% year on year and 19% Q1Q. This gives us comfort that we’ll be able to rebalance the portfolio proportionality over our planning horizon. Low yielding RIDF bonds declined by 5761 crores year on year. RIDF comprised 0.46% of our total assets at March 26 compared to 0.9% of our assets at March 25. Quality of our liabilities on March 26 measured by outsourced to their 28.8%.
We continue to remain focused on this variable. Qab CASA at 37% we’ve seen an improvement of 39 basis points on CASA pricing from FY26 compared to FY23. The impact of marginal YOY decline in QRB CASA was offset by the rate benefit across parts of the liability stack. The cost of deposits declined 46bps YoY and 4bps Qiq. Our fee income grew 4% year on year and 6% Q1Q total retail fee grew 2% year on year 11% QoQ supported by the Small Business Banking, Small Enterprises Group Liabilities and Cars Business Services.
The wholesale fee grew 8% year on year. Our wholesale banking coverage group’s fees grew 14% year on year medium enterprises group fee grew 14% year on year. Our transaction banking fee grew 5% year on year. Trading profit and miscellaneous income at negative 538 crores declined QoQ and BIOI mainly due to MTM losses on investments in government securities bonds debentures shares. Operating expenses for the quarter stood at 10,466 crores growing 6% year on year and 9% QoQ adjusted for the one time items aggregating to 408 crores the core growth was 4%.
One time items comprise increase in staff cost attributable to provisioning for employee benefits of 126 crores in the current quarter and one time reversal of accruals of staff expenses no longer payable required to be paid in the previous quarter aggregating to 282 crores. The yoy increase in operating expenses is 629 crores. 36% of the increase is attributable to technology spends. 33% is volume linked expense growth while the balance is BU expense partly offset by statutory cost reduction. The QOQ increase in operating expenses is 830crores.
Of this 408crores is due to one time items and staff cost. Operating expenses other than staff were up 7% QoQ largely driven by BAU volume linked expenses offset by PSLC cost reduction. Technology and Digital spends grew 14% year on year and constituted 10% of our total operating expenses. We opened 166 branches in the quarter and 400 new branches in FY26. We are PSL compliant at a headline level and at each subsegment level. Net credit cost for the quarter was 1146 crores. Annualized cost 37 bips declining 13bps yoy 39bps qoq.
The cumulative non NPA provisions at 31 March 2026 is 15,473 crores comprising prudent provisions for standard assets, 7013 crores restructuring provisions of 197 crores standard asset provisions higher than regulatory rates of 1,733 crores, an additional one time standard asset provision of 1231 crores and other weak and other asset provisions of 5299 crores. Moving to growth across our liability and loan franchise. Amitabh already discussed the growth in loans and deposits. We gained 20 basis points of market share on our loan franchise and maintain stable market share on a YOY basis on our deposit franchise.
Our loan growth is granular well balanced with retail advances constituting 55% of our overall advances, corporate at 33 and our commercial banking group at 12. Please refer slides 22 and 23 for details around the quality of our liability franchise and slides on our loan franchise. 73% of our loans are floating rate. 48% of our fixed rate book matures in 12 months. Breakup of the floating rate book by benchmark type and MSILA repricing frequency is set out on slide 14 of our investor presentation.
In Q4FY 26 retail disbursements grew 24% year on year and 19%. QoQ disbursement growth in home loans was 28% y o y 15% QoQ vehicle loans was 25% yoy 10% QoQ retail agri was 34% yoy 19% QoQ personal loan growth was 22% yoy 9% QoQ moving to the Performance of our subsidiaries Detailed performance of our subsidiaries is set out on slides 55 to 62 of the investor presentation. In FY26 the domestic subsidiaries reported a net profit of 2,051 crores growing 16% year on year. The QoQ PAT growth is 9%. The return on investment in domestic subsidiaries was 54%.
Axis Finance overall assets under finance grew 22% year on year of which share of retail plus MSME at 57% of total book versus 54% last year. FY26 pack grew 19% year on year to rupees eight hundred and six crores. Strong asset quality with a net NPA of 0.36% and negligible restructuring provisions made in the quarter to comply with upper layer regulations is 48 crores. Axis AMC quarterly overall quarterly average AUM grew 12% year on year to 3.59,601 crore. FY26 path to debt 596 growth growing 19% year on year.
Access securities path stood at 366 crores. Access capital patch grew 61% year on year till 259 crores. Moving to asset quality provisioning and restructuring the slippage GNPA NNPA PCR ratios for the bank and segment LI for retail, CBG and Corporate are set out on slide 47 of our presentation. Gross slippages for the quarter were 4,709 crores. Office retail was 4,098 crores, commercial banking 297 and our wholesale banking coverage group at 314. Our gross slippage ratio for the quarter declined sequentially 48bps and 27bps year on year.
Our gross slippage ratio excluding technical impact declined 31bps year on year, 31bps quarter on quarter and 70bps year on year for the quarter. 35% of gross slippages are attributed by attributed to linked accounts of borrowers which were standard when classified or have been upgraded in the same quarter. Net slippages for the quarter were 2013 crores. Net slippages segmentally were 1,708 crores retail, 164 for commercial banking and 141 crores for our wholesale banking coverage team. Net slippage ratio for the quarter declined 11bps yoy 41bps qoq.
Net slippages ratio for the quarter excluding technical impacts declined 18bps. Qoq declined 18bps yoy and 32bps qoq. Recoveries from written off accounts was 1197 crores up 28% year on year. Net slippages for the quarter adjusted for recoveries from written off pool was 815 crores segmentally retail at 1041 CBG at 93. Wholesale banking coverage at a minus 319 crores. Please see slides 48, 71 and 72 for quantification of technical impact across segments. Technical impact has lost its reporting relevance as it will be in the base period for next quarter’s reporting.
Further, the net slippages are down to negligible levels. Hence we will discontinue this disclosure from Q1FY27. In summary, Axis bank continues to make progress towards building a stronger, more sustainable franchise. We remain vigilant on monitoring macro, geopolitical environment, inflation, liquidity and our cost of funds along with their impact on our business. Thank you for your patience. This concludes our opening remarks. We’d be happy to take your questions.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press STAR and then one on their Touchstone phone. An operator will take your name and announce your turn in the question queue. Participants are requested to use only handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question. Your first question comes from the line of Chintan from Autonomous. Please go ahead.
Chintan Joshi
Hi, good evening. Thank you for taking my question. Can I start with NII and nims? You know, could you remind us if there is any day count convention benefit in your NIMS? Secondly, if the full 25bps rate cut from has been passed on your EBLR book. And thirdly, if there’s any residual TD repricing left on your book, that’s the question on nim. And then I’ve got a question on the corporate growth. You know at 34% year on year you’re growing your corporate book meaningfully faster than your peers.
What opportunity do you see that others may not be seeing? And also you know, could you kind of show us in your you know, the numbers or qualitatively how this has benefited your roa or is that still left in the future? Because I know it’s NIM dilutive but it may not be ROA dilutive. Just want to understand how do we observe that improvement of metrics? How do we go about analyzing that bit of growth?
Puneet Sharma
Chintan, thank you for your questions. I’d probably have to respond in parts. So the first part of your question on have we transmitted the 25 basis points repo rate cut last quarter on our entire loan book? I would request you to look at slide 14 of our investor presentation. The repo linked book is 61% so that would have gotten repo priced and the full repricing effect would be in the yields for the current quarter. Because just to recollect and remind you, we transfer repo rate pricing at the end of the quarter in which the rate cut was announced.
So this quarter has full impact of repo rate cut on the 61% of the loan book on the same slide We’ve given you tenor wise breakup on MCLR and other EBLR so those will reprice as per the tenors we’ve set out there. I hope that covers the first question. The second question on the growth and how is it benefiting us on the corporate side? I’ll request Vijay to come in on where he’s seeing growth. But I just want to make sure we reassure you we monitor all of our businesses on risk adjusted return on capital.
There has been no dilution in risk adjusted return on capital in the current fiscal compared to what we reported last fiscal for this segment there has been no dilution in risk standards. 91% of this book is rated A and above both on stock and flow roughly follow the same pattern. So we’ve not gone down the credit curve. I’ll pause there. I’ll request Vidya to come in on growth
Chintan Joshi
Just quickly on the NI before we go to Vijay. Is there a day count convention benefit in your nims? If you can remind us on that and any TD residual TD repricing left
Puneet Sharma
Chintan, there is no day count representation. We simply follow number of days in the quarter annualized for days in a year. So we have no artificial decrease convention management as part of our reported NIMs. So the number of days a quarter has that is what will get annualized. The government securities book follows a 30 by 360 methodology. That is market standard. We follow that for the GSEC book. So we have no further comment to add on day count convention. It is we have consistently reported we have not changed our methodology on margin competition
Chintan Joshi
And residual TD repricing
Puneet Sharma
Since then. We don’t provide the data on residual TD repricing in percentage terms but we do have some legs left on that lever as we move forward.
Vijay Mulbagal
That is helpful. Thank you. Thank you. And Vijay
Unidentified Participant
Hi Chandan. On the wholesale side, our playbook remains unchanged. We selectively grow and we are not chasing growth here. We invest in sectors with the strongest cycles and clear micro tailwinds. Incrementally growth was seen in power largely renewables, commercial real estate data centers, NBSC largely again ESL driven and manufacturing again as Puneet reiterated. I should also add to that that growth remains quality led. We our both pricing filters and rare rock discipline is maintained even as we are growing.
And of course we use the opportunity of balance sheet to ensure that we are getting reciprocal transaction flows leading to fee expansion and float expansion and obviously driving on access outcomes which includes corporate salary, Access Capital Trusteeship, etc.
Chintan Joshi
Thank you. Thank
Unidentified Participant
You.
Operator
Thank you. Your next question comes from the line of Ricken Shah from IIFL Capital. Please go ahead.
Rikin Shah
Hi, good evening. I had three questions. The first one is, you know the strategy of NI maximization has translated into growth acceleration. But with the sharp rise in the wholesale deposit rates that we have seen, do you think it warrants a focus moving back to margins? Just trying to understand when do we reach to this 3.8 through the cycle NIM guidance that we have earlier provided. So that’s the first one. I will come back with two questions after this.
Amitabh Chaudhry
I just want to reiterate that you know, obviously we are trying to ensure that we maximize the value for the institution. Looking at NIM growth and obviously the risk profile of what we are trying to do on the asset side, we will continue to optimize them as we move forward depending on the policies, the risks that we see and as all of us are aware of what’s happening with West Asia. So you might see in some quarters growth which is more than what we are guiding in the medium term, that we always maintain that from a product mix perspective we expect 70, 30, 70% is what is retail and SME kind of business and 30% is wholesale plus minus 3% and 4% here and there and that’s what we expect to maintain.
So and we have not shifted away from our stance that we expect to deliver 3.8% in through cycle. We are working towards this. I mean obviously it’s a target not easy to pin down on because the interest rates continue to behave in a manner in a shape which is very difficult to predict. Given all of that we are optimizing everything.
Rikin Shah
Fair enough Amitabh. But any comment on when do we think this we can achieve this 3.8% is it like any time frame that we would like to define?
Puneet Sharma
Ricken thank you for the question. We’ll reiterate we’ve said we will get to through cycle 38015 to 18 months from transmission of last rate cut. That’s a consistent comment we’ve offered. We are not moving away from that comment.
Rikin Shah
Got it. Perfect. The second one is on the net technical slippages now clearly inching closer to zero. Wanted to get a sense on what could be the loan yield uplift from the absence of this interest reversal due to technical slippages next year. And also is there a possibility of any recoveries that can be achieved in these technical slippages in the next fiscal.
Puneet Sharma
Thank you for that question Ritan. I think on technical slippages we’ll reiterate when technical slippages were first reported by us we made two comments. We said gross slippages will decline through the year and net slippages will decline even faster. I’ll request your attention to slide 48 of our investor presentation. In the first quarter when we reported technical impact gross slippages were 2,700 crores. They’re down to 1240 crores. Net slippages were 1861 crores, they’re down to 218 crores.
In percentage terms the net slippage is now 0.07%. Effectively what we had said and anticipated is playing through. We continue to believe that there should not be an economic loss on this portfolio. We’ll be able to recover it over time. We do not want to provide guidance or outlook on when this portfolio will get fully recovered. It’s going into BAU and we’ll continue to operate it as bau.
Rikin Shah
Got it. And then just the last question Puneet to your earlier opening remarks that PSL full compliance has been achieved. So just wanted to clarify whether it is including the PSLC purchases or it is organic X of those purchases we have achieved full compliance. And also if you could just you know, quantify the absolute amount of AFS reserves as of the March end.
Puneet Sharma
Thanks for again for that question. PSL compliance at headline and sub segment levels counts PSLC purchased. We are not organically compliant but that’s been a strategy that we have consistently followed. If you look at our annual disclosures, we’ve endeavored to be fully compliant including PSLC purchases on AFS reserve. Give me 20 seconds, I’ll just come back to you.
Rikin Shah
Sure. Thanks for answering the questions. And Amita.
Puneet Sharma
254 crores is our AFS reserve on a gross basis at 31-3-2026.
Vijay Mulbagal
That’s the positive number, right?
Puneet Sharma
It’s a negative number.
Vijay Mulbagal
Okay,
Operator
Thank you. Your next question comes from the line of Kunal Shah from Sadhguru. Please go ahead.
Kunal Shah
Yeah, so again touching upon the same question in terms of NII optimization last time we indicated that maybe irrespective of the NIM profile we will still look at NII growth maybe as our maybe the target. And this quarter compared to that of the overall loan growth it appears to be relatively weak at 1 odd percent. Would it be fair to assume that maybe larger part of growth is coming through towards the end of the quarter and we should see the benefit of growth leveraging coming through in the next year and for the full year should we still expect NII to outpace the overall loan growth looking at this NII optimization strategy given that now rates are almost where they are and deposit repricing as you mentioned would be towards the end.
Yeah,
Puneet Sharma
Kunal, thanks for the questions. Let me again respond to them. In parts business does get booked through the quarter. Quarter four is the strongest quarter for the industry as well as us. So yes, there is a gap between MEB growth and average balance growth which does play through on NII versus growth. Please also appreciate that if you are measuring NII growth in its absolute quarter on quarter, there is loan growth number and then there is interest earning assets growth number. So I would request you to focus on interest earning assets growth because that plays to NII not just advances growth.
The interest earning assets growth is marginally lower than loan growth as we stand today. The last element obviously between the loan growth walk and the NII is the 2 basis points margin contraction that has played through in the current quarter. So that’s the bridge to the growth versus NII walk. To your pointed question on was the growth period end or will we see the growth sustain and have net interest income from that growth. The book has continued to hold up. So it was not a period end bump up that we reported.
On the advanced side. I hope that answers all of your questions. Thank you.
Kunal Shah
Yeah, perfect. And a couple of more. So one is overall in terms of the step up on the retail side, so we had seen maybe almost 4% growth. You indicated the disbursement growth that has been quite strong. So we should really see the step up now getting into the double digit kind of retail growth getting into the next year looking at the disbursement momentum or this was more like a Q4 phenomena. And then maybe on fee income side overall relatively weak across the board, including all the private banks in say the single digit kind of a number.
So how should we look at it going forward? Would it continue to trail the balance sheet growth? Yeah. Thank you.
Munish Sharda
So, Kunal, hi, this is Munish. First of all, you know it’s not a quarter for phenomena. We’ve shown you last quarter also we saw a decent acceleration in our dispersal numbers in retail assets and in assets. As Puneet and Amitabh told you, we’re looking to grow assets in businesses and we continue to push for growth in those businesses. Our investments in technology, digital, etc. Or working with the branches to deepen the relationship with the own customers, et cetera, is helping us accelerate the momentum and we hope to continue to maintain this momentum in the retail asset group which will eventually start feeding into the overall book growth number.
Operator
Got it. And on the fee side,
Munish Sharda
Similarly, you’ve seen our fee numbers. We hope to as the, as the core businesses grow and as our branch business also grows and with the additional new branch, etc. We also continue to hope to see acceleration in the fee lines as well as we go into the next year.
Kunal Shah
Okay, thanks. Thanks. Yeah,
Operator
Thank you. The next question comes from the line of Abhishek Murarka from hsbc. Please go ahead.
Vijay Mulbagal
Yeah. Hi, good evening. Thanks for taking my question. So my first question is again on growth. So now since we are seeing a pretty strong pickup in, you know, retail disbursements and SME looks good as well. Do you see a need to calibrate your corporate deposit growth just from a rare rock or ROA perspective, You know that that change in mix will drive, you know, drive your P and L and make it look better. So do you see any need to calibrate that corporate deposit growth? And if not, then do we really care about the 60% retail, 15 SME, 25 corporate kind of mix or does that not really matter because on a rare off basis you’re generating pretty much similar returns.
So how do we think about this?
Amitabh Chaudhry
So on the liability side, I think we are seeing an institutionalization of the deposit base. Obviously as a bank you would like you talking
Vijay Mulbagal
Deposit. Sorry, sorry, my bad. Yeah, I meant corporate loans. Yeah,
Neeraj Gambhir
The
Vijay Mulbagal
Whole question was about the loan mix and corporate loans. My bad, sorry.
Puneet Sharma
Abhishek, thanks for the question. Let me, let me respond to the railroad question first because that lead into the second response. See racks continue to remain healthy for the wholesale business. We can confirm to you that RAUC that this business had FY25 have held up through FY26. So growth has not come at the compromise of RAUC. The book composition at A and above has stayed at 91%. So we’ve not seen growth come at the cost of asset quality or origination quality as we speak. The theoretical question that you asked is as long as radar hold up well, why bother between a mix of wholesale and retail?
The challenge is that there is a finite amount of leverage that a financial institution can have to retain its AAA rating. We will need to manage that leverage ratio for ourselves and consequently are leverage agnostic roes are leverage dependent. So as we look to manage the max leverage that we can work with within a capital structure that we are comfortable with, we will need a balanced book. Therefore our commentary that in the near term we are optimizing for NII with wholesale growth but we will look to recalibrate the book back.
That should hopefully give you a full color of our thinking behind rack roe and book composition.
Vijay Mulbagal
Yeah, sure. And by when do you start decalibration? Because it’s been a while since retail picked up but now it has, it seems to have picked up quite strong
Unidentified Participant
As we speak. I mean, you know, the levels in our hand are. In our hands are really the activity levels on the ground on the retail asset side which is fairly strong which is reflected in Q1Q disbursement growth apart from the year on year disbursement growth that you are seeing on the retail asset side. So the calibration in that sense is continuing, it’s ongoing. So from our perspective you’ll see the retail book growth continue to happen as we have seen in the last two or three quarters. And like Amitabh mentioned, the overall ratio of about 70, 30, give or take 3% on either side is where we’ll be.
So from our perspective that’s what we are doing. What’s in our Control is continued focus on making sure that we are in front of the customers and getting the business which you can see on the retail disbursement side is happening and with punish also reiterated is happening quite strongly.
Vijay Mulbagal
Sure. Okay. And the second one is on opex. Can you please clarify? What I got is there’s a 126 crore one time cost and a 282 crore reversal. Was it or it was a cost again?
Puneet Sharma
Abhishek, if you look at my comments, last quarter we did call out that we reversed employee benefit expenses no longer payable last quarter. In the last quarter your staff cost went down because of the reversal. In the current quarter we’ve provided for 129 crores. It is not on account of what we reversed. It is basically rate movement for employee benefits. In one quarter we had a negative which is the prior quarter. In the current quarter we have a positive. Therefore the numbers have moved in opposite directions.
The cumulative impact of that as I called out for you was roughly about 408 crores. Adjusting for that 408 crores, I had called out the growth numbers on a Q OQ basis to be 4%. I hope that clarifies.
Vijay Mulbagal
Got it? Yeah. Yeah, got it. All right. Thank you so much for answering the question.
Operator
Thank you. The next question comes from the line of Adarsh from Hinam. Please go ahead. Adarsh, your line is unmuted. Please proceed with your question. As there is no response from the line of current participant. We’ll move on to our next question. Our next question comes from the line of MB Mahesh from Kotak Securities. Please go ahead.
Mahesh Balasubramanian
Puneet, just two questions. One is on that the raw argument that you present. Since we can’t observe segmental radar for the company and we can, we can, we can kind of see only the ROE side of it. If you were to kind of triangulate and see what the roes looks like, is it meaningfully lower than a number like 15% or are you targeting for a different number here?
Puneet Sharma
Nice. Thank you for the question. I think the aspirational roe was 18%. And at the bank level, given the component outlook we’ve provided, it’s a fair assumption that you can assume that there will be retail ROEs. Retail SME ROEs marginally higher than wholesale roe. So we don’t really want to put a number at a segment level. At the bank level we continue to aspire for 18% is what we would like to state.
Mahesh Balasubramanian
Okay. The second question is from the credit cost line now that we are seeing slippages trending lower and credit cost trending lower, keeping everything else constant. How do you look at FY27?
Amitabh Chaudhry
Mahesh, you know Puneet is not going to give you a guidance. I’m not permitted to give you a guidance. I’ll just say that given where we are and given if you look at the trend line and the fact that we have said that we have seen civilization in some of our portfolios, I mean you can then stretch that trend line. I mean obviously the joker in the pack is how long this West Asia prices last and what impact it has on India. And that’s why one of the reasons why we made this provision just to protect ourselves.
But if we ignore West Asia, then you know where the trend line is going. If West Asia crisis continues, frankly I don’t know where this trend line will go because it’s very difficult to predict at this stage how long, what sectors, how much the impact would be, what India will be able to manage, not able to manage, what the inflation would be, etc. So we’ll be watching the space closely and that’s why even if as we have grown in the wholesale side, you will see that from a strategy perspective we have not sacrificed our asset quality at all.
We are very, very careful where we are giving this money out. And same applies to retail. While we’re seeing disbursal growth, we’re being very, very cautious about while we are growing. We want to be very careful where we grow.
Mahesh Balasubramanian
Thank you. Just one clarification on the incremental disbursements that you’re doing. One of the conversations that we’ve had previously is that there was significant tightening of the underlying credit filters in the last two years and that was expected to open up as the portfolio starts behaving better over time. Have we reverted to back to where we are earlier or are you still kind of comfortable to hold the stance that you’re more open to kind of take a bit more risk than before? Thank you
Puneet Sharma
Mahesh. Thank you for the question. The growth that we have delivered on disbursement is without loosening our risk filters as on date, we’ve clearly been prudent and we don’t expect to be loosening our growth, our risk filters on a go forward basis. Sorry Maish, was I audible or did I miss or did you miss me? Please,
Mahesh Balasubramanian
I got the answer. Thank you.
Puneet Sharma
Thank you. Thanks Maish.
Operator
Thank you. The next question comes from the line of Marukania from Sara Capital. Please go Ahead.
Mahrukh Adajania
Hi, good evening. I just have two questions. You talked about your buffer provision you created this quarter saying that if, you know, seeing quoting $150. So does that mean that if indeed the situation gets worse from here on, you would actually be drawing down on these provisions this year itself because you’ve not drawn down on your earlier contingency provisions. That’s why asking. So that’s my first question and my second question is that just in terms of deposits, right, Deposit taking, basically it’s getting a little tight for the sector though.
Deposit growth for the sector has moved up, loan growth has moved up even faster. So given that dynamic, is there a potential for deposit rates to rise from here? So these are my two questions.
Puneet Sharma
Maruk, thank you for the questions. I’ll take the first one and then request Neeraj to come in on the second. The way we’ve constructed the provision is it is not a floating provision. There is an underlying identified pool of loans across customer segments, across products. That identification of pool of loans was done pursuant to a framework our risk team set up for stress testing. So these are an identified set of loans. On these identified set of loans we have a additional standard asset provision of 2001 crore.
In the inadvertent event of loans from this pool slipping, this provision will get utilized to take care of slippages from this pool. So the construct of this provision is very different from the 5012 crores we were holding for expected credit losses. There is a clear utilization against pools that get impacted by the West Asia crisis. So the short answer to your question is yes, we will draw down on these provisions in the event we see an impact on the PNL in FY27.
Mahrukh Adajania
Okay, but for that does oil have to go to 150 or there’s no such thing. It’s just that the pool should be impacted.
Puneet Sharma
Maru, It’s. Look, the 150 comment and I want to contextualize this because you picked up one part of the comment I made. The comment holistically I made was even if I take the most stress scenario my risk team gave me the slippages that I would have would stand fully covered from a provisioning perspective by the standard asset provision we’ve created today. So I have not at any point in time said that that slippage will happen. Asset quality remains stable. But yes, if this, if anything from this pool were to slip related to West Asia crisis, not everything will slip at 150.
Something may slip at 110. If assets from this pool slip and the slippage is not in the ordinary course of business. This provision will get utilized
Amitabh Chaudhry
To
Neeraj Gambhir
Answer your deposit pricing question. I think we are looking at two different markets. One is the retail deposit market and second is the wholesale or bulk deposit market. In the retail deposit market banks reduced the pricing by approximately estimated 10 to 15 basis points in response to the 25 basis cut. So to that extent the transmission was incomplete. But given where the market is, I don’t see any further cuts happening. Second, on the bulk deposit market or the wholesale deposit market is the usual year end phenomenon that we see in the last quarter.
Last month of the quarter we see some kind of an uptick in the bulk deposit rates. This time that uptick was a little bit more accentuated because we saw sell off in the bond market. We saw higher yields in the CD market and that kind of transmitted back into the bulk deposit market as well. As we transition to this new year, we have seen some softening of bulk deposit rates. But it’s a wait and watch. Liquidity in the system is good but really the question is what happens to the crude oil prices to the currency, et cetera, which is what the market is reacting to.
Mahrukh Adajania
Okay, thank you. Thanks a lot.
Operator
Thank you. Ladies and gentlemen, we take that as our last question for today. I now hand the conference over to Mr. Puneet Sharma for closing comments.
Puneet Sharma
Thank you, Sagar. Thank you everyone for taking the time this evening. If any questions remain unanswered please feel free to reach out to Rahul or myself. We’d be happy to take them offline. Thank you and have a good evening.
Operator
Thank you. On behalf of Axis bank, thank you for joining us. And you may now disconnect your lines. Thank you.