Kotak Mahindra Bank Q2 profit jumps 26 pc on core income, drop in provisions

Mumbai, Oct 24 (PTI) Kotak Mahindra Bank on Saturday reported a 26 per cent jump in its consolidated net profit for the September quarter at Rs 5,645 crore.

On a standalone basis, the private sector lender reported a 29 per cent increase in profit after tax to Rs 4,212 crore, aided by core income growth and lower provisions.

Its core net interest income was up 16 per cent to Rs 8,459 crore, helped by a 25 per cent jump in net advances and constrained by a 0.23 per cent compression in the net interest margin.

The bank said the mobilisation of Rs 55,344 crore of FCNR(B) deposits under the RBI’s concessional swap facility led to the NIM compression during the reporting quarter.

It also said that loans aggregating to Rs 16,110 crore were disbursed as

part of the FCNR(B) scheme, which also allowed for leveraged borrowing against deposits.

The bank’s managing director and chief executive Ashok Vaswani said the bank expects to maintain the NIMs in the remainder of the fiscal year.

Money raised from the special window has not been fully deployed, and doing so in subsequent quarters will be a drag on the NIMs while the RBI rate hikes will offset the same as 60 per cent of its book is linked to the repo rate, he explained.

In Q2, it used the FCNR(B) funds to reduce its high-cost borrowings from IBPC (Inter-Bank Participation Certificate) and also acquired some loans of its wholly owned subsidiary Kotak Mahindra Investments, Vaswani said.

Excluding the FCNR(B)-related impact, the loan growth would have come at 19 per cent and the deposit growth would have been 13 per cent, it said.

The FCNR(B) scheme mobilisation also affected the share of low-cost current and savings account (CASA) deposits in the overall base, the bank said, noting the ratio dipped to 38.2 per cent as of September, down from 42.3 per cent in the year-ago period.

From an asset quality perspective, the bank reported a decline in slippages at Rs 1,230 crore in the reporting quarter as against Rs 1,629 crore in the year-ago period, and the gross non-performing assets ratio improved to 1.04 per cent as against the year-ago period’s 1.39 per cent.

Overall provisions and contingencies declined by 15 per cent on-year to Rs 803 crore in the reporting quarter.

Amid headwinds like poor monsoons, inflation and the West Asia crisis, Vaswani said the bank is aware these are difficult times and is continuously monitoring the portfolio. The bank is focused on responsible and profitable growth, he added.

Its whole-time director, Paritosh Kashyap, said the small fleet owners segment, which had faced difficulties in past quarters, is now stable, with repayment rates improving.

Anup Saha, the MD and CEO designate who will take charge in a few months, said overall demand for credit is holding up well presently, and the bank will watch for challenges posed by a deficient monsoon during the festive surge.

Vaswani said the bank will also be launching a payments proposition in association with Apple Pay in a couple of quarters.

He said over a fourth of the consolidated profit after tax comes from the subsidiaries at present.

Among the subsidiaries, the life insurance arm’s net profit rose manifold to Rs 198 crore, while Kotak Mahindra Capital’s net profit rose 34 per cent to Rs 80 crore.

The bank’s Capital Adequacy Ratio was 21.9 per cent, with the core CET1 buffer at 21.4 per cent as of September 30, 2026. PTI AA MR