Kotak Mahindra Bank Reports 3% Decline in Q2 Profit Amid Rising Costs

Kotak Bank , one of India's leading private sector lenders, reported a 3% year-on-year decline in standalone net profit for the second quarter, as rising costs offset growth in income. The bank's performance reflects the challenges faced by the Indian banking sector in a dynamic economic environment.

Key Financial Highlights

Net Profit: ₹3,253.00 crore, down 3% from ₹3,344.00 crore in the same quarter last year
Net Interest Income (NII): Rose 4% year-on-year to ₹7,311.00 crore
Net Interest Margin (NIM): Declined to 4.54% from 4.91% year-on-year
Gross Non-Performing Assets (GNPA): Improved to 1.39% from 1.49% a year ago
Net Non-Performing Assets (NNPA): Reduced to 0.32% from 0.43% year-on-year

Income and Expense Analysis

The bank's total income grew by 2% to ₹16,238.59 crore, compared to ₹15,900.46 crore in the same quarter last year. This growth was primarily driven by a 4% increase in interest earned, which reached ₹13,649.41 crore.

However, the bank's expenses also saw an uptick:

Interest expended rose by 2.3% to ₹6,338.67 crore
Operating expenses increased marginally by 0.6% to ₹4,631.65 crore

The cost-to-income ratio stood at 46.8%, showing a slight improvement from 47.5% in the same quarter last year.

Asset Quality and Provisions

Kotak Mahindra Bank's asset quality showed improvement:

Gross NPAs decreased to ₹6,479.58 crore from ₹6,033.17 crore a year ago
Net NPAs reduced to ₹1,490.98 crore from ₹1,723.83 crore year-on-year

The bank's provision coverage ratio strengthened to 77% from 71% year-on-year, indicating a more conservative approach to potential risks.

Business Growth

The bank reported robust growth in its loan book and deposit base:

Net advances grew by 16% year-on-year to ₹462,688.00 crore
Total deposits increased by 15% to ₹528,776.00 crore
CASA (Current Account Savings Account) ratio stood at 42.3%, down from 43.6% year-on-year

Capital Adequacy

Kotak Mahindra Bank maintained a strong capital position:

Capital Adequacy Ratio (CAR) at 22.05% under Basel III norms
Tier I ratio at 20.9%, well above regulatory requirements

Outlook

Despite the slight dip in profitability, Kotak Mahindra Bank's improved asset quality and strong capital position indicate resilience. The bank's ability to grow its loan book and deposit base in a competitive market is noteworthy. However, the pressure on margins and the slight decline in the CASA ratio will be areas to watch in the coming quarters.

As the Indian economy continues to navigate global uncertainties and domestic challenges, Kotak Mahindra Bank's performance in the subsequent quarters will be crucial in determining its growth trajectory.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-0.46%	-0.83%	+6.80%	-1.80%	+23.71%	+58.13%

Kotak Bank , one of India's leading private sector banks, has announced its financial results for the second quarter of fiscal year 2026, showcasing a mixed performance amid challenging market conditions.

Key Financial Highlights

Consolidated net profit for Q2 FY26 stood at ₹4,468.27 crore, down from ₹5,044.05 crore in the same quarter last year.
Total consolidated income for the quarter decreased to ₹24,901.39 crore from ₹26,880.02 crore year-on-year.
Net Interest Income (NII) increased to ₹7,311.00 crore, up 4% from ₹7,020.00 crore in Q2 FY25.
Gross Non-Performing Assets (NPA) ratio improved to 1.39% from 1.49% in the previous year.
Net NPA ratio also showed improvement, standing at 0.32% compared to 0.43% in Q2 FY25.
Fresh slippages reported at ₹1,629.00 crore in Q2, down from ₹1,812.00 crore in the previous quarter, indicating a quarter-on-quarter decrease.

Segment Performance

The bank's performance across various segments showed mixed results:

Segment	Revenue (₹ crore)	YoY Change
Treasury, BMU and Corporate Centre	3,132.57	-5.57%
Retail Banking	8,343.93	0.80%
Corporate / Wholesale Banking	6,699.89	7.51%
Vehicle Financing	1,084.97	5.88%
Other Lending Activities	570.24	-4.09%
Broking	1,127.75	-2.75%
Asset Management	823.95	22.88%
Insurance	5,072.74	-31.04%

Balance Sheet Strength

Kotak Mahindra Bank maintained a robust balance sheet:

Capital Adequacy Ratio stood at 22.8% under Basel III norms, well above regulatory requirements.
Average Liquidity Coverage Ratio was strong at 132% for Q2 FY26.
The bank's consolidated networth reached ₹167,935.00 crore as of September 30, 2025.

Asset Quality

The bank's focus on maintaining asset quality is evident from the improved NPA ratios and reduced fresh slippages. The growth in Net Interest Income despite challenging conditions suggests effective management of the bank's core operations.

Segment Analysis

The Asset Management segment showed strong growth with a 22.88% increase in revenue year-on-year.
Corporate / Wholesale Banking segment revenue grew by 7.51%, indicating robust performance in this area.
The Insurance segment faced significant headwinds, with revenue declining by 31.04% compared to the same quarter last year.
Retail Banking, which contributes the largest share of revenue, maintained slight growth at 0.80% year-on-year.

Conclusion

Despite the year-on-year decline in consolidated net profit, Kotak Mahindra Bank's improved asset quality, reduced fresh slippages, and strong capital position indicate resilience. The bank's diversified business model, with strong performance in asset management and corporate banking segments, may help offset challenges faced in other areas, particularly in the insurance segment.