Kotak Mahindra consolidated profit rises 26% to 5,645 crore rupees in second quarter
Key Facts
Kotak Mahindra Bank raised its consolidated net profit 26% year on year to 5,645 crore rupees in the quarter from July to September of fiscal year 2027, compared with 4,468 crore rupees in the corresponding period of the previous fiscal year. Consolidated profit increased 3% from the previous quarter, according to data reported by Business Standard. The bank’s standalone profit rose 29% year on year to 4,212 crore rupees. The newspaper attributed the growth in standalone profit to lower provisions and a 16% increase in net interest income. The results show profit growth alongside a decline in net interest margin, as foreign-currency deposit mobilisation weighed on the margin during the quarter.
Net interest income was 8,459 crore rupees, up 16% year on year and 7% compared with the first quarter of fiscal year 2027. Income was 7,311 crore rupees in the second quarter of fiscal year 2026 and 7,928 crore rupees in the previous quarter. Net interest margin, meanwhile, fell to 4.31%, from 4.54% a year earlier and 4.53% in the first quarter. The bank said the moderation in the margin was largely due to the mobilisation of FCNR(B) deposits during the quarter. It raised about 55,344 crore rupees through these deposits, while extending loans of about 16,110 crore rupees through its international branches.
The chief executive described the FCNR deposit programme as a one-time opportunity and said the bank had raised $5.78 billion through it, or about 55,000 crore rupees. He added that the amount exceeded what the bank’s usual share of the deposit market would suggest. Net advances stood at 5.77 trillion rupees in September 2026, up 25% year on year, while total deposits reached 6.51 trillion rupees, up 23%. But advances grew 19% after excluding loans funded by FCNR(B) deposits and the loan portfolio acquired from Kotak Mahindra Investments, while deposit growth was 13% after excluding those foreign-currency deposits.
The current and savings account mix fell to 38.2% of total deposits, from 42.3% a year earlier; the ratio was 41.8% after excluding FCNR(B) deposits. The credit-to-deposit ratio rose to 88.6% from 87.5% in September of the previous year. On asset-quality indicators, provisions fell 15% to 803 crore rupees, compared with 947 crore a year earlier. The annualised cost of credit also declined to 0.35% from 0.79%, while fresh slippages fell 24% to 1,230 crore rupees from 1,629 crore. Gross non-performing assets fell to 1.04% of advances as of September 30, 2026, from 1.39% a year earlier, while net non-performing assets declined to 0.24% from 0.32%.
The provision coverage ratio was 78%, compared with 77% a year earlier. Fee and service income rose 21% year on year to 2,926 crore rupees during the quarter, while operating expenses increased 14% to 5,271 crore. Among subsidiaries, Kotak Securities reported a profit of 348 crore rupees, Kotak Mahindra Prime posted a profit of 251 crore, and Kotak Mahindra Life Insurance earned 198 crore. Standalone capital adequacy was 21.9% as of September 30, including a common equity tier 1 ratio of 21.4%. Standalone annualised return on assets was 1.92%, while return on equity was 11.65%.
In trading on October 23, 2026, the bank’s shares fell 1.49% to 430.50 rupees, compared with a previous close of 437 rupees. Coverage of the results call quoted the chief financial officer as saying that the full impact of deposit mobilisation during the quarter would be seen in the third quarter, and that gradual deployment of liquidity and repricing of repo-linked and other floating-rate loans could provide an offset. The chief financial officer also said the deployment of uninvested liquidity would continue over the coming quarters. He expected the full impact of passing on the repo rate cut to floating-rate loans to be seen in the fourth quarter of fiscal year 2027. He added that these factors would affect the net interest margin trajectory in the coming periods.