MUMBAI, Oct. 17 -- Higher operating expenses and a squeeze on margins tempered Axis Bank's earnings in the September quarter (Q2FY27), offsetting the benefit of lower provisions and steady growth in net interest income. The lender's net profit rose 38% from a year earlier, but slipped from the June quarter as the influx of foreign currency non-resident (FCNR) deposits under a special Reserve Bank of India (RBI) window weighed on its net interest margin.

On Saturday, India's third-largest private sector lender reported a net profit of Rs.7,003 crore for the quarter ended 30 September, up 38% year-on-year but down 2% sequentially. Operating expenses rose 9% from a year earlier and 11% from the previous quarter to Rs.10,819 crore.

In its i...