Axos Financial's Q3 2025: Unpacking Contradictions in Loan Growth, Deposits, and Margin Stability

Loan growth and market conditions, deposit cost reduction strategy, margin outlook and stability, loan growth expectations and factors affecting loan growth, net interest income trends and expectations are the key contradictions discussed in Axos Financial's latest 2025Q3 earnings call.



Strong Financial Performance:
- Axos Financial reported over $700 million in net loan growth for the quarter, with a 19% year-over-year increase in book value per share and a 16% return on average common equity.
- This performance was driven by stable net interest margins and an increase in loan yields.

Deposit and Funding Strategies:
- Total on-balance sheet deposits increased by 5.4% year-over-year to $20.1 billion, with a 6.9% year-over-year growth in demand money market and savings accounts.
- The company managed to reduce its interest-bearing deposit costs to 3.59% for the quarter, contributing to cost efficiency.

Credit Quality and Loan Loss Reserves:
- Net annualized charge-offs to average loans were 9 basis points, and nonaccrual loans declined by $66.5 million during the quarter.
- Axos Financial maintained a conservative approach to loan loss reserves and ALLLoL, with no significant increase in nonperforming assets.

Investment in Technology and Efficiency:
- The company is investing in AI and low-code development to enhance software development and operating efficiency, indicating a focus on technological advancement.
- Initiatives include replacing third-party workstations with proprietary platforms and leveraging AI for business process improvements.