India's Axis Bank slides after quarterly profit falls short of expectations

Oct 19 (Reuters) - Axis Bank's AXBK.NS shares fell as much as 5% on Monday after the private lender reported September-quarter profit slightly below expectations as higher costs and weaker other income offset steady loan growth.

Shares of the country's third-largest private-sector lender by assets were trading 4% lower at 1,238.9 rupees as of 10:39 a.m. IST after hitting their lowest since October 5.

The stock posted its biggest intraday fall since September 24 and was the biggest loser on the sectoral sub-index .NSEBANK.

HDFC Bank HDBK.NS and ICICI Bank ICBK.NS, which also reported quarterly results over the weekend, were trading down 2.2% and 0.9%, respectively.

Axis Bank posted a standalone net profit of 70.03 billion rupees ($739 million) on Saturday, missing analysts' average estimate of 71.24 billion rupees, according to LSEG data.

Treasury income was hit by rising bond yields and rupee volatility, constraining earnings despite growth in lending across segments.

Citi analysts said stable core margins and lower credit costs partly offset higher operating expenses and softer fee income. The brokerage, however, cut its fiscal 2027 earnings-per-share forecast by about 4%, citing near-term cost pressures.

PhillipCapital said margins could remain under pressure in the near term due to foreign-currency non-resident (FCNR) deposits, a higher share of wholesale loans and dependence on bulk deposits.

The brokerage cut its target price to 1,540 rupees from 1,550 rupees, but expects margins to recover as the bank deploys FCNR-related liquidity, optimises its balance sheet and benefits from loan repricing.

BOB Capital Markets also struck a constructive tone, saying margins had likely bottomed out and should improve from the third quarter as Axis deploys FCNR deposits, repays high-cost liabilities and benefits from higher rates on floating-rate loans.

($1 = 94.7600 Indian rupees)