Kotak Mahindra Bank Q2 PAT down 3% on higher provisions

Kotak Mahindra Bank’s net interest income (NII) or core income was up 4% y-o-y at ₹7,311 crore in Q2, while other income de-grew 4% to ₹2,589 crore. 
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ADNAN ABIDI

Kotak Mahindra Bank announced a 3% decline in net profit for the September quarter, totaling ₹3,253 crore compared to the previous year. The downturn stemmed from increased provisions, credit costs, and compressed margins.

The bank’s net interest income climbed 4% year-on-year to ₹7,311 crore during Q2, while other income dipped by 4% to ₹2,589 crore. Net interest margins (NIM) slid to 4.54% from 4.65% in the preceding quarter, though management anticipates improvement in the latter half of FY26, contingent on deposit repricing and unchanged repo rates.

Provisions surged 43% year-on-year to ₹947 crore, and operating expenses edged up 1% to ₹4,632 crore. Fresh slippages reduced to ₹1,629 crore, with recoveries and upgrades at ₹688 crore. Write-offs increased to ₹1,099 crore versus ₹638 crore in the same period last year. Credit costs eased to 0.79% from 0.93% in Q1 and may decline further in H2FY26.

The gross non-performing asset ratio improved to 1.39% as of September 2025, down from 1.49% a year earlier, while net NPAs stood at 0.32%. Collections strengthened in unsecured personal loans and credit cards, though retail commercial vehicle loans saw rising delinquencies. MD & CEO Ashok Vaswani indicated plans for mid-double-digit growth in the unsecured lending segment.

Total deposits expanded 14% to ₹5.10 lakh crore, with net advances rising 16% to ₹4.62 lakh crore. Management projects loan growth at 1.5-2 times nominal GDP expansion.

Inorganic Growth Prospects

CEO Ashok Vaswani affirmed the bank’s openness to strategic acquisitions but declined to comment on speculation regarding IDBI Bank. He emphasized evaluating opportunities across banking and subsidiaries—asset management, insurance, and securities—based on strategic alignment and financial viability.

“We aim to scale our customer base and businesses,” Vaswani stated. “Any inorganic move must create value both strategically and financially.”

Separately, the Reserve Bank of India approved the reappointment of C S Rajan as Independent Director and part-time Chairman for a term spanning January 1, 2026, to October 21, 2027.

Published on October 25, 2025