Business EconomyPosted at: Oct 24 2026 6:25PM


Kotak Mahindra Bank Q2 PAT rises 29 pc to Rs 4,212 crore; NIM falls to 4.31 pc

Mumbai, Oct 24 (UNI) Kotak Mahindra Bank on Saturday reported a 29 per cent year-on-year increase in standalone net profit to Rs 4,212 crore for the second quarter ended September 30, 2026, but its net interest margin (NIM) moderated to 4.31 per cent following the mobilisation of around Rs 55,000 crore in foreign currency non-resident bank (FCNR(B)) deposits.
The bank's management said the funds were used to repay expensive inter-bank participation certificate (IBPC) borrowings and finance the acquisition of the Kotak Mahindra Investments Ltd (KMIL) loan portfolio, while the remaining liquidity was parked pending deployment into customer assets.
Responding to UNI question, Devang Gheewalla said the FCNR(B) mobilisation had affected margins during the quarter, but the bank expected the deployment of surplus funds into higher-yielding loans, along with repricing of repo-linked advances, to support margins in the coming quarters.
“Underlying core margins, excluding these effects, remained at the same level as in the first quarter,” Gheewalla said, explaining the factors behind the sequential decline in NIM.
The bank's NIM fell to 4.31 per cent in Q2FY27 from 4.53 per cent in the preceding quarter and 4.54 per cent in the year-ago period. Gheewalla said FCNR(B) deposits and associated advances contributed about 50 basis points to the margin calculation, while the remaining decline was attributable to quarter-specific account variations and the repayment of IBPC borrowings.
On the outlook for the second half of the financial year, management said the full-quarter impact of FCNR(B) deposits in Q3 and Q4 would continue to weigh on margins. However, it expected this to be offset by the impact of repo-rate changes and the redeployment of FCNR(B) funds into customer assets.
“Hopefully, Q3 and Q4 will see margins in the same region as Q2,” management said.
Gheewalla noted that around 60 per cent of the bank's existing advances were repo-linked, making their repricing another factor expected to influence margins. The bank is evaluating opportunities to deploy its surplus FCNR(B) liquidity into customer assets at suitable rates, segments and tenures as the rate cycle evolves.
The bank's standalone net profit rose to Rs 4,212 crore from Rs 3,253 crore in Q2FY26, while consolidated net profit increased 26 per cent to Rs 5,645 crore from Rs 4,468 crore a year earlier.
Standalone net interest income (NII) grew 16 per cent year-on-year to Rs 8,459 crore from Rs 7,311 crore. Sequentially, NII increased seven per cent from Rs 7,928 crore in Q1FY27, while net profit rose two per cent.
Operating profit increased 21 per cent year-on-year to Rs 6,382 crore. Fees and service income rose 21 per cent to Rs 2,926 crore, while operating expenses increased 14 per cent to Rs 5,271 crore.
The bank mobilised approximately Rs 55,344 crore in FCNR(B) deposits during the quarter and extended loans of around Rs 16,110 crore through its international branches.
Net advances grew 25 per cent year-on-year to Rs 5,77,295 crore as of September 30, 2026. Excluding loans against FCNR(B) deposits and the loan portfolio acquired from KMIL, advances grew 19 per cent.
Total deposits increased 23 per cent to Rs 6,51,491 crore. Excluding FCNR(B) deposits, deposit growth stood at 13 per cent. The CASA ratio declined to 38.2 per cent from 42.3 per cent a year earlier, reflecting the increase in the term deposit base following FCNR(B) inflows. Excluding these deposits, the CASA ratio stood at 41.8 per cent.
Asset quality improved, with gross non-performing assets declining to 1.04 per cent from 1.39 per cent a year earlier and net non-performing assets falling to 0.24 per cent from 0.32 per cent. Slippages declined 24 per cent year-on-year to Rs 1,230 crore, while provisions fell 15 per cent to Rs 803 crore.
The annualised credit cost stood at 0.35 per cent, compared with 0.79 per cent in the year-ago quarter.
The bank reported an annualised standalone return on assets of 1.92 per cent and return on equity of 11.65 per cent. Its capital adequacy ratio stood at 21.9 per cent, with the Common Equity Tier 1 ratio at 21.4 per cent.
At the consolidated level, customer assets grew 21 per cent year-on-year to Rs 6,99,250 crore. Consolidated assets under management increased eight per cent to Rs 8,14,118 crore, while domestic mutual fund assets under management rose 10 per cent to Rs 6,15,679 crore.
The bank had 5.1 crore customers as of September 30, 2026, and operated 2,327 branches and 2,673 ATMs, including cash recyclers.
UNI BDN
Tags: #Kotak Mahindra Bank Q2 PAT rises 29 pc to Rs 4#212 crore; NIM falls to 4.31 pc
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