Axis Bank says FCNR flows present large opportunity, share in foreign deposit flows to be higher than its organic market

Mumbai: Axis Bank expects its share in foreign currency flows through the Reserve Bank of India-backed scheme to be higher than its overall share of business. “As a franchise, we are comfortable stating that our market share will be higher than our organic market share,” chief financial officer Puneet Sharma said in the bank’s June quarter earnings call.

As of 30 June, the bank's deposit market share was 5.1%, while its share of total sector advances was 5.7%, according to the investor presentation.

Axis Bank managing director and chief executive officer (CEO) Amitabh Chaudhry said the FCNR-B deposit scheme is drawing strong interest from non-resident Indians (NRIs), and the bank sees a ‘meaningful opportunity’ to grow its deposit base through its NRI franchise and through tie-ups with overseas banks.

However, the bank did not comment on the deposit flows garnered so far, saying that it expects to have a clearer picture by next quarter. The FCNR-B window is open till 30 September.

Sharma said that FCNR(B) deposits present an opportunity to focus on growth and to deploy this additional liquidity towards that growth. This liquidity and growth could subsequently provide the bank an opportunity to ‘pay down some liabilities’.

Margins seen bottoming out

“We'll see how that plays out,” he said, adding that this should help margins for banks to improve going forward. The private lender’s net interest margin (NIM) for the quarter was 3.46%, lower than 3.62% in the previous quarter and 3.80% a year ago.

“This is a cycle bottom as far as NIMs are concerned. We are hopeful that from here on, you will see the NIMs journey moving in the right direction,” Sharma added.

This was Sharma's last earnings with the bank as he is set to join HDFC Bank as the CFO-Designate from 1 September and eventually take over as CFO from December 2026. The board of Axis Bank on Saturday approved the appointment of former Bandhan Bank CFO Rajeev Mantri as Sharma's replacement, from 28 September 2026.

Axis Bank’s cost of funds declined 35 basis points on-year and 2 bps on quarter to 5.04% in the reporting quarter, with the bank saying it is working to strengthen its deposit franchise through increased generalization and a more stable liquidity mix

Total deposits grew 18% on year and 3% on quarter to ₹13.7 trillion as at the end of June. Current account deposits were up 6% on year, and savings account deposits were up 14%, together comprising 38% of total deposits. Term deposits grew 23% over this period.

The bank said it continues to gain market share in both advances and deposits. Total advances grew 19% on year and 2% to ₹12.6 trillion, led by 38% increase in wholesale loans, 25% in small and medium enterprise (SME) loans and 8% in retail loans.

The strong growth in wholesale loans has been driven by sectors that are seeing ‘underlying economic tailwinds as well as strong transaction flows’, such as energy, commercial real estate, infrastructure, metals, and industrials, the bank’s management said. Demand from mid-corporates has been strong, and the bank is also seeing growth from conglomerates and non-bank lenders, especially for priority-sector loans.

Sharma said the bank will continue to grow credit at 300 bps above the industry level, which is expected to be around 12% for FY27.

While growth in retail loans has been slower, disbursals have started to improve, and the bank expects growth to pick up in the coming quarter, executive director Munish Sharda said. “We're pushing for the growth in the retail assets across all of our lines, and we're seeing healthy growth coming through now,” he said.