Kotak Mahindra Bank Q3 net profit up 4%, slightly below estimates; asset quality improves

Private sector lender Kotak Mahindra Bank Ltd on Saturday (January 24) reported a consolidated net profit of ₹3,446 crore for Q3 FY26, up 4.3% from ₹3,305 crore in the same period last year, slightly below the CNBC-TV18 poll estimate of ₹3,547 crore.

Operating profit increased 4% YoY to ₹5,380 crore from ₹5,181 crore, supported by a 5% YoY rise in net interest income to ₹7,565 crore.  Net interest income (NII) grew 5.1% YoY to ₹7,564 crore, marginally lower than the CNBC-TV18 poll forecast of ₹7,589 crore.

Asset quality improved quarter-on-quarter, with gross NPA at 1.30% compared to 1.39% in Q2 FY26 and net NPA at 0.31% versus 0.32% QoQ. In absolute terms, net NPA stood at ₹1,497 crore, slightly higher than ₹1,491 crore YoY, while gross NPA declined to ₹6,320 crore from ₹6,479.5 crore in the same period last year.

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Consolidated customer assets, including advances and credit substitutes, grew 15% YoY to ₹598,780 crore as of December 31, 2025, while total customer assets under management increased 15% YoY to ₹787,950 crore. Domestic mutual fund AUM rose 20% YoY to ₹586,610 crore.

Consolidated net worth reached ₹175,251 crore, with book value per share rising to ₹176 following the 1:5 share subdivision effective January 14, 2026. Consolidated return on assets (ROA) for Q3 FY26 (annualised) was 2.10%, and return on equity (ROE) was 11.39%.

On the standalone front, net advances increased 16% YoY to ₹480,673 crore, and customer assets rose 15% to ₹529,455 crore. Period-end deposits grew 15% YoY to ₹542,638 crore, with CASA ratio at 41.3%. The credit-to-deposit ratio was 88.6%, and the bank served 5.1 crore customers. Average cost of funds declined to 4.54% from 5.06% in Q3 FY25.

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Fee and service income increased 8% YoY to ₹2,549 crore, while operating expenses rose 8% YoY to ₹5,023 crore, including an estimated ₹96 crore incremental cost due to the new Labour Code. Excluding this impact, operating expenses were ₹4,927 crore, with cost-to-income at 47.4%.

Gross NPA and net NPA improved to 1.30% and 0.31%, respectively, from 1.50% and 0.41% a year ago, with a provision coverage ratio of 76%. Credit cost (annualised) stood at 0.63% for Q3 FY26. Standalone ROA (annualised) was 1.89%, and ROE was 10.68%.

Capital adequacy ratios remained strong, with a consolidated CAR of 23.3% and CET1 of 22.4%, while standalone CAR and CET1 were 22.6% and 21.5%, respectively, including unaudited profits. The average liquidity coverage ratio for the quarter was 135%.

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Fund Raising

The bank said its board of directors approved raising up to ₹15,000 crore through the issuance of unsecured, redeemable, non-convertible debentures (NCDs) on a private placement basis during FY 2026-27. The issuance can be made in one or more tranches or series, subject to shareholder approval and other regulatory permissions as required.

Shares of Kotak Mahindra Bank Ltd ended at ₹422.20, down by ₹3.60, or 0.85%, on the BSE.