Axis Bank’s second-quarter results and an increase in foreign currency non-resident bank deposits have spurred bullishness among Citi and Goldman Sachs, signalling strong growth prospects for the lender.
Axis Bank is set to stay in investors’ sights after Citi and Goldman Sachs kept bullish views on the lender, pointing to brisk second-quarter business growth and a large surge in foreign currency non-resident bank deposits, or FCNR(B) balances. According to NDTV Profit, Citi kept a Buy rating and a target price of Rs 1,620 a share, while Goldman Sachs reiterated Buy with a 12-month target of Rs 1,477.
The optimism follows a strong set of provisional numbers for the quarter ended September 30, 2026. Data from the bank and reports by Investing.com and ICICI Direct showed gross advances rising 22.7% from a year earlier and 8.8% from the previous quarter, while total deposits increased 20.7% year on year and 5.8% quarter on quarter. CASA deposits, the current and savings account balances that are usually cheaper for banks to fund, rose 10.6% annually, though that pace was slower than the broader deposit expansion.
A major driver was FCNR(B) mobilisation. NDTV Profit reported that Axis Bank raised $10.62 billion through these deposits, equal to about 8% of system-wide mobilisation, above its roughly 5.3% share of system deposits. Goldman Sachs noted that $4.57 billion of the inflows were funded through the bank’s overseas branches. Investing.com said some of those foreign currency deposits were used to reduce non-retail term deposits, which fell during the quarter, while the bank also issued standby letters of credit linked to the arrangement.
Citi said the overseas funding mix could trim net interest margins by about 8 basis points sequentially in the quarter, because the spread on lending against FCNR deposits is lower after hedging costs. Even so, the brokerage expects the effect to be cushioned by lower agricultural slippages and the run-off of costlier bulk deposits, with net interest income seen rising about 10% year on year. Goldman Sachs argued that the bank’s cyclical pressures are now largely behind it and that margins should improve from FY28 as the mix shifts further towards retail and small and medium-sized enterprise lending. Axis Bank shares closed 0.82% higher on Monday at Rs 1,223.95 on the BSE.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
