**Axis Bank Q3 FY26 Market Brief** **Financial Performance** Axis Bank reported a **modest 2.9%** year-on-year increase in net profit to **₹6,490 crore** for the third quarter ended December 31, 2025. Net Interest Income (NII) grew **5%** to **₹14,287 crore**, supported by a **15%** surge in total deposits. However, profitability was constrained by a narrower Net Interest Margin (NIM), which contracted to **3.64%** due to persistent cost-of-funds pressures. **Operational Headwinds** Performance was impacted by higher credit costs and specific regulatory adjustments. The bank absorbed a one-time catch-up provision of **₹55 crore** tied to new project finance norms, which heavily influenced the quarter's accounting. Despite these technical factors, core operating profit rose **7%** to **₹10,815 crore**, reflecting underlying business resilience. **Asset Quality & Balance Sheet** Asset quality showed steady improvement, with the Gross NPA ratio declining to **1.40%** (down **6 bps** QoQ) and Net NPA easing to **0.42%**. The loan book grew **14%** year-on-year to **₹11.59 lakh crore**, driven by a strategic recalibration of the portfolio towards higher-yielding segments. **Market Reaction** Investor sentiment remained cautious ahead of the earnings release, with the stock closing at approximately **₹1,258** on the BSE, down **2.7%** in the preceding session. Market participants are closely monitoring the bank's ability to manage margin compression in a tight liquidity environment.