Axis Bank vs SBI (2026): Growth, NIM, Credit Cost & Which Is Better?

Axis Bank vs SBI: Q1 FY2027 operating scoreboard

Axis paid for some of that growth through term deposits

Term deposits increased 23% on a month-end basis.

CASA grew more slowly.

Month-end CASA ratio stood around 38%.

Quarterly-average CASA was approximately 37%.

This matters because term deposits usually cost more than current and savings deposits.

The good news is that Axis' cost of funds was already declining year on year.

The bank is therefore expanding deposits without an obvious current funding-cost blowout.

Axis says it wants to grow about 300 basis points faster than the industry

That target makes underwriting discipline more important than the Q1 growth number itself.

Management sees opportunities in areas including:

• Data centres.
• Renewable energy.
• Manufacturing.
• Urban infrastructure.
• Large NBFC borrowers.
• Gold-backed retail lending.
• Smaller-city credit demand.

These are not all the same risk.

Data-centre lending can involve large project exposures.

Gold lending is highly collateralised.

SME lending requires borrower-level underwriting.

The growth target should therefore be judged by portfolio composition rather than a single total-advance percentage.

Axis corporate loans grew 38%

That is one of the most important numbers in the quarter.

Corporate credit has reaccelerated after years in which Indian banks depended heavily on retail lending.

Axis grew mid-corporate loans 27% and SME loans 25% as well.

SBB, SME and mid-corporate lending together now represent roughly one-quarter of the loan book.

This diversification can improve growth durability.

It also moves the bank toward borrower segments where one bad large exposure can matter more than thousands of small consumer defaults.

Gold loans are a very different growth engine

Axis' gold-loan book reportedly grew about 94% year on year in June.

The percentage looks spectacular because the base is much smaller than mortgages or corporate lending.

Economically, secured gold lending can be attractive because:

• Collateral is liquid.
• Loan tenors are relatively short.
• Loss given default can be lower.
• Demand extends into smaller cities.

The risk is operational rather than only credit related.

Appraisal standards, loan-to-value discipline and auction processes matter enormously.

Axis still earns a wider spread than SBI

Q1 NIM was 3.46%.

SBI's domestic margin was 3.00%.

Whole-bank SBI margin was 2.86%.

That spread advantage explains a large part of Axis' higher ROA.

Axis earns approximately 1.51% ROA despite being much smaller.

SBI earns 1.11%.

But Axis margin has still fallen materially from a year ago

Q1 FY2026 Axis NIM was 3.80%.

Q1 FY2027 NIM was 3.46%.

That is meaningful compression.

Lower funding costs have not yet fully offset repricing on the asset side.

Management expects margin pressure to bottom around the mid-3% area.

If that happens while 18%-19% balance-sheet growth continues, earnings growth can remain healthy.

Axis' profit growth is cleaner than last year's comparison initially suggests

PAT rose 23% to ₹7,114 crore.

The prior-year quarter contained a technical classification impact that raised slippages and provisions.

So the comparison benefits from an easier base.

Current fundamentals still improved meaningfully:

• GNPA fell to 1.28% from 1.57%.
• NNPA fell to 0.39% from 0.45%.
• Gross slippage ratio declined sharply.
• Net credit cost fell to 0.63%.

It is therefore wrong to dismiss the entire PAT growth as a base effect.

The growth is broad across SBI's entire economy-facing book

SBI did not rely on one product category.

• Retail personal advances: +15.15%.
• Corporate advances: +18.05%.
• SME: +22.33%.
• Agriculture: +25.43%.
• Foreign-office advances: +21%+ in rupee terms.

A bank this large effectively participates in almost every major credit cycle in India.

That reduces dependence on one segment.

It also means SBI cannot easily escape a broad economic downturn.

SBI's real constraint is deposits

Loans grew 18.63%. Deposits grew only 9.73%.

The gap is much wider than at Axis.

SBI still has an extraordinary funding franchise:

• ₹60.06 lakh crore of total deposits.
• ₹22.61 lakh crore of CASA deposits.
• 39.24% CASA ratio.

But percentage growth matters.

If loans continue to outgrow deposits by almost nine percentage points, the bank must eventually obtain more expensive incremental funding or slow credit growth.

The FCNR strategy is one attempt to close the funding gap

SBI has been raising foreign-currency deposits under the RBI's concessional swap framework.

The bank had mobilised billions of dollars and set a substantially larger target.

This can provide attractive rupee funding after hedging.

It is opportunistic funding.

It should not be confused with a permanent substitute for domestic retail deposits.

SBI earns less margin but loses less to credit cost

Credit cost was only 0.27%.

Axis reported 0.63%.

The difference is 36 basis points.

That offsets part of Axis' 46-60 basis point NIM advantage, depending on whether SBI domestic or whole-bank NIM is used.

This illustrates why NIM alone is not bank profitability.

The economically useful spread is what remains after operating expense and credit losses.

SBI's asset quality is now almost indistinguishable from large private banks

GNPA was 1.47% and NNPA 0.38%.

Axis GNPA was 1.28% and NNPA 0.39%.

Axis has the cleaner gross number.

The net numbers are practically identical.

SBI's NPA ratios are now at their best levels in more than two decades.

This destroys one of the easiest historical arguments for automatically valuing SBI at a deep discount.

Then why does SBI still trade more cheaply?

Because low NPAs do not automatically create private-bank-level ROA.

SBI's NIM remains thin.

Its balance sheet carries a large low-yielding and regulated footprint.

Government ownership can constrain the valuation investors are willing to pay.

Its international business and public-policy role also make the economics broader than a pure profit-maximising private bank.

ROA versus ROE produces the most interesting contradiction

Axis earns more from every rupee of assets but SBI earns more from every rupee of shareholder equity.

Axis:

• ROA: 1.51%.
• ROE: 14.16%.
• CET1: 14.64%.

SBI:

• ROA: 1.11%.
• ROE: 17.87%.
• CET1: 12.89%.

SBI operates with less common equity relative to its risk-weighted assets.

That higher financial leverage magnifies shareholder ROE.

Higher leverage is useful until credit quality turns

This is why ROE should never be read without capital and asset quality.

A bank can improve ROE by carrying less equity.

If loan losses rise, there is less cushion.

Axis currently carries more CET1.

SBI still has comfortable regulatory capital and its CET1 improved strongly year on year.

Neither appears undercapitalised.

Axis subsidiaries create optionality SBI investors should not ignore

Axis' domestic subsidiaries generated ₹546 crore of Q1 PAT, up 21%.

The ecosystem includes:

• Axis Finance.
• Axis AMC.
• Axis Securities.
• Axis Capital.
• Axis Max Life.

Management has discussed potential future listings for Axis Max Life and, at a later stage of scale, Axis Finance.

Any IPO should be valued only when structure and pricing become concrete.

The subsidiaries nevertheless represent earnings streams not visible through NIM alone.

SBI's financial-services ecosystem is larger in absolute terms

SBI also owns valuable businesses outside the core bank.

• SBI Life.
• SBI Mutual Fund.
• SBI Cards.
• SBI General Insurance.
• SBI Capital Markets.

The group's reach allows SBI to monetise the same household through banking, investments, insurance and cards.

That distribution advantage is difficult to reproduce even with superior technology.

Digital banking is not a private-bank monopoly anymore

SBI said roughly 98.8% of transactions occur through alternate channels.

More than 64% of savings accounts opened during Q1 were opened digitally through YONO.

Axis has its own strong digital position:

• About 16 million monthly active users on Axis Mobile.
• Approximately 38% market share in UPI payer PSP volume.
• 22.1% merchant-acquiring terminal share.

The useful conclusion is not that one app "wins."

Both banks now possess scaled digital distribution.

Is SBI cheap at 11x earnings?

The answer depends on whether today's low credit cost is sustainable.

If SBI can maintain:

• 15%+ loan growth.
• ROA above 1%.
• GNPA below 2%.
• Credit cost below 0.5%.
• Domestic NIM around 3%.

then the current multiple looks less demanding.

If credit cost normalises sharply upward, part of today's earnings base disappears.

Axis' valuation requires stronger ROA improvement than SBI's

Axis already receives a higher multiple but currently earns only 1.51% ROA.

The bank's five-year history shows it can earn higher returns.

Management is trying to restore the profitability trajectory through:

• Better operating leverage.
• Funding-cost reduction.
• Faster focus-segment growth.
• Subsidiary profit growth.
• Lower credit cost.

The share-price upside depends on these improvements becoming durable rather than one-quarter effects.

Market performance shows SBI has already rerated harder

SBI has produced the stronger one-year return.

That means part of the PSU-bank quality rerating has already occurred.

What should investors track next?

Axis Bank vs SBI FAQs

Which bank has more deposits?

SBI, with approximately ₹60.06 lakh crore versus Axis Bank at ₹13.73 lakh crore.

Which bank grew deposits faster?

Axis Bank, at approximately 18% year-on-year versus SBI at 9.73%.

Which bank grew loans faster?

The percentage rates are almost identical. Axis grew advances 19%; SBI grew 18.63%.

Which has the higher NIM?

Axis Bank at 3.46%, versus SBI at 3.00% domestically and 2.86% whole-bank.

Which has the higher ROA?

Axis Bank at 1.51% versus SBI at 1.11%.

Which has the higher ROE?

SBI at 17.87% versus Axis Bank at 14.16%.

Which has lower credit cost?

SBI at approximately 0.27%, versus Axis at 0.63%.

Which has better asset quality?

Axis has slightly lower gross NPA at 1.28% versus SBI at 1.47%. Net NPA is effectively tied at 0.39% for Axis and 0.38% for SBI.

Which stock is cheaper?

SBI on late-August 2026 P/E and P/B.

Where can the underlying data be checked?

Use the Axis Bank Bull Run stock page and SBI stock page.

Research sources

• Bull Run — Axis Bank
• Bull Run — State Bank of India
• Axis Bank official Q1 FY2027 results
• Axis Bank investor presentations
• SBI official quarterly results
• SBI official analyst presentations
• Reuters — Axis Bank credit-growth strategy