Kotak Mahindra Bank posts 26% rise in Q2 profit amid higher earnings and better asset quality

Kotak Mahindra Bank posted a 26% year‑on‑year rise in net profit for the September quarter, reaching ₹5,645.38 crore. The profit beat the consensus forecast from LSEG but fell short of domestic brokerages that expected 27‑32% growth. Total income grew 18% YoY to ₹29,426.88 crore, while other income jumped nearly 25% to ₹9,571.01 crore. On a quarter‑to‑quarter basis, total income slipped 2.1% and other income fell 18.3%. Net interest income rose 16% YoY to ₹8,459 crore, yet the net interest margin narrowed to 4.31% from 4.54% in the prior quarter. The bank said the margin pressure stemmed from deposits raised under the RBI’s special FCNR‑B window, which added ₹55,344 crore. Asset quality improved, with the gross non‑performing asset ratio falling to 1.04% from 1.39% a year earlier and the net NPA ratio dropping to 0.24% from 0.32%. Provisions were cut by 15% YoY to ₹803 crore. Operating expenses rose 14% YoY to ₹5,271 crore, partially offsetting higher income and lower provisions. For the first half of FY27, net profit totaled ₹11,125.84 crore. As of September 30, net advances expanded 25% YoY to ₹5,77,295 crore and deposits grew 23% YoY to ₹6,51,491 crore.

Context

Improved asset quality and higher earnings suggest the bank is managing credit risk while attracting foreign‑currency deposits, a trend that can boost profitability but may compress margins if cost‑of‑funds rise.