Kotak Mahindra Bank Q2 Profit Surges 29% to Rs 4,212 Crore
Kotak Mahindra Bank reports a 29% rise in Q2 standalone profit, though net interest margins narrow due to foreign currency deposit inflows.
Kotak Mahindra Bank has posted a strong performance for the July-September quarter of FY27, with its standalone net profit jumping 29 per cent year-on-year to reach Rs 4,212 crore. This marks a significant increase from the Rs 3,253 crore reported during the same period last year. The bank's overall consolidated profit after tax also saw a healthy climb, rising 26 per cent to Rs 5,645 crore compared to Rs 4,468 crore in the previous year.
Income Growth and Margin Pressure
The bank's Net Interest Income (NII)—the core difference between what it earns from loans and what it pays on deposits—grew by 16 per cent, climbing to Rs 8,459 crore from Rs 7,311 crore a year ago.
However, the results revealed a slight dip in the Net Interest Margin (NIM), a critical metric for measuring lending profitability. The NIM narrowed to 4.31 per cent, down from 4.54 per cent in the corresponding quarter last year and 4.53 per cent in the immediate preceding quarter.
Addressing this dip, the bank explained that the moderation in NIM was primarily driven by the mobilisation of Foreign Currency Non-Resident (Bank) deposits, known as FCNR(B), during the quarter.
The Impact of Foreign Currency Deposits
The bank saw a massive influx of foreign currency, mobilising approximately Rs 55,344 crore in FCNR(B) deposits. Additionally, its international branches provided loans totaling around Rs 16,110 crore.
These large inflows significantly boosted the headline figures for the bank's balance sheet:
- Net Advances: Increased by 25 per cent year-on-year to Rs 5,77,295 crore as of September 30, 2026. However, when excluding loans against FCNR(B) deposits and the portfolio acquired from Kotak Mahindra Investments, the growth rate was 19 per cent.
- Total Deposits: Rose by 23 per cent to Rs 6,51,491 crore. Excluding FCNR(B) deposits, the growth stood at 13 per cent.
- CASA Ratio: The Current Account and Savings Account (CASA) ratio declined to 38.2 per cent from 42.3 per cent a year ago. When FCNR(B) deposits are removed from the calculation, the ratio was 41.8 per cent.
Asset Quality and Operational Efficiency
On the positive side, Kotak Mahindra Bank reported a noticeable improvement in its asset quality. The Gross Non-Performing Assets (GNPA) dropped to 1.04 per cent from 1.39 per cent a year earlier, while the Net NPA fell from 0.32 per cent to 0.24 per cent.
Other key financial highlights include:
- Slippages: Declined by 24 per cent year-on-year to Rs 1,230 crore.
- Provisions: Fell by 15 per cent to Rs 803 crore.
- Operating Profit: Increased by 21 per cent to Rs 6,382 crore.
- Fees and Services Income: Rose by 21 per cent to Rs 2,926 crore.
While the bank demonstrates stronger earnings and a cleaner balance sheet, the narrowing lending margins and the gap between reported and adjusted growth remain key areas for investors and analysts to monitor in the upcoming quarters.