City Union Bank has informed stock exchanges that the Reserve Bank of India (RBI), vide its letter dated May 6, 2026, has accorded its approval to Kotak Mahindra Bank Limited to acquire an aggregate holding of up to 9.99% of the paid-up share capital or voting rights in City Union Bank. The disclosure was made pursuant to Regulation 30 of the SEBI Listing Regulations, 2015.

RBI Approval for Stake Acquisition

The RBI's approval, communicated through letter No. CO.DOR.HGG.No.S1015/16-01-136/2026-2027 dated May 6, 2026, authorizes Kotak Mahindra Bank to hold up to 9.99% of the shareholding in City Union Bank. Such regulatory clearances from the Reserve Bank of India are mandatory for acquiring significant stakes in Indian banking institutions.

Regulatory Conditions

The approval granted by the RBI is subject to compliance with several regulatory frameworks. These include the relevant provisions of the Banking Regulation Act, 1949, and the Reserve Bank of India (Commercial Banks — Acquisition and Holding of Shares or Voting Rights) Directions, 2025 dated November 28, 2025, as amended from time to time. The approval is also contingent on adherence to the provisions of the Foreign Exchange Management Act, 1999, regulations issued by the Securities and Exchange Board of India, and any other applicable statutes, regulations, and guidelines.

Significance of the Development

The RBI's clearance is a key regulatory requirement for any entity seeking to acquire a meaningful stake in a scheduled commercial bank in India. The approval positions Kotak Mahindra Bank as a potential notable shareholder in City Union Bank, subject to the completion of the actual acquisition process. No further details regarding the transaction value, timeline, or terms of the stake purchase were disclosed in the regulatory filing.

Kotak Mahindra Bank Limited delivered a strong quarterly performance with standalone net profit for Q4 reaching ₹4,026 crore, marking a 13% year-on-year growth from ₹3,550 crore in the corresponding quarter last year. The bank reported revenue of ₹14,200 crore for the quarter, a 5% increase from ₹13,500 crore in the previous year. The Board of Directors approved these audited standalone and consolidated results at their meeting held on May 2, 2026. Following the results, several leading global brokerages maintained bullish ratings on the stock, citing strong core performance, improving asset quality, and attractive valuations.

Q4FY26 Standalone Performance Highlights

The bank demonstrated robust operational performance across key metrics during the fourth quarter:

Asset Quality Shows Marked Improvement

The bank demonstrated significant improvement in asset quality metrics with Gross NPA ratio declining to 1.20% in Q4 from 1.30% in the previous quarter, while Net NPA ratio improved to 0.25% from 0.31% quarter-on-quarter. Fresh slippages for the quarter declined to ₹1,018 crore, representing a substantial improvement from ₹1,610 crore in the previous quarter and ₹1,488 crore in the corresponding quarter last year.

FY26 Annual Financial Performance

For the full financial year, the bank reported steady growth in key revenue streams:

*Excluding gain on ZKGI divestment

Business Growth and Customer Metrics

The bank maintained strong growth momentum across its lending and deposit portfolios:

Consolidated Results and Subsidiary Performance

Consolidated PAT for Q4FY26 stood at ₹5,423 crore, up 10% YoY from ₹4,933 crore in Q4FY25. For FY26, consolidated PAT reached ₹19,288 crore. Key subsidiaries contributed significantly to overall performance:

Capital Position and Dividend Recommendation

The bank maintained robust capital adequacy with Basel III ratio at 22.40% and CET1 ratio at 21.30%, well above regulatory requirements. The Board recommended a dividend of ₹0.65 per equity share of face value ₹1 for FY26, subject to shareholder approval at the Annual General Meeting. Return on Assets stood at 2.14% for Q4FY26 and Return on Equity at 12.27% for the quarter.

Brokerage Views Post Q4FY26 Results

Following the Q4FY26 results, leading global brokerages weighed in with their assessments. The majority maintained bullish stances, highlighting the PAT beat, improving asset quality, and steady loan and NII growth as key positives. The following table summarises the ratings and target prices: