Kotak Mahindra Bank consolidated adj net profit up 1% at ₹4,472 crore in Q1

Reported profit down 40% as last year's profit of ₹7,448 cr was boosted by a ₹3,013 cr gain from sale of stake in insurance arm

Kotak Mahindra Bank on Saturday reported a 40 per cent year–on–year (Y-o-Y) decline in its consolidated net profit to ₹4,472.18 crore in the April–June quarter of the financial year 2025-26 (Q1FY26), mainly due to the gain of ₹3,013 crore it had earned in the year-ago quarter from the divestment of 70 per cent stake, through a combination of fresh growth capital and share sale, in its subsidiary Kotak Mahindra General Insurance Company (KGI) to Zurich Insurance Company. The consolidated net profit in the year-ago quarter was ₹7,448.16 crore.

 

A rise in provisions and contingencies due to higher slippages, also weighed on profits for the recently concluded quarter.

 

 

Excluding the gain from stake sale in KGI, consolidated net profit was up 1 per cent Y-o-Y to ₹4,472 crore in Q1FY26, compared to ₹4,435 crore in Q1FY25, according to the bank’s investor presentation. The total assets under management of the bank group grew to ₹7.50 trillion, up 18 per cent Y-o-Y from ₹6.36 trillion.

 

On a standalone basis, which reflects the banking operations, Kotak Mahindra Bank reported a 6.8 per cent Y-o-Y decline in net profit (excluding the stake sale gain) to ₹3,282 crore in Q1FY26 compared with ₹3,520 crore in Q1FY25.

 

The bank’s net interest income (NII) grew 6 per cent Y-o-Y to ₹7,259 crore, while other income grew 5 per cent during the period to ₹3,080 crore. 

 

The bank reported a net interest margin (NIM) of 4.65 per cent in Q1FY26, compared to 5.02 per cent in the corresponding period last year (Q1FY25). NIM is a measure of profitability of banks, while NII is the difference between interest earned and interest expended.

 

It reported fresh slippages of ₹1,812 crore in Q1FY26, up 33 per cent Y-o-Y and 22 per cent sequentially. As a result, its provisions and contingencies rose over 100 per cent Y-o-Y to ₹1,208 crore in Q1FY26, compared to ₹578 crore in Q1FY25. Sequentially, it was up 32.8 per cent from ₹909 crore in Q4FY25.

 

The bank’s asset quality deteriorated in the quarter, with gross non-performing assets (NPAs) ratio at 1.48 per cent, up 6 basis points from Q4FY25. Net NPA ratio was also up 3 basis points sequentially at 0.34 per cent.

 

The bank’s credit cost stood at 0.93 per cent in Q1FY26, compared to 0.64 per cent in Q4FY25, and 0.55 per cent in Q1FY25.  "Credit costs in our micro finance (MFI) business, which contribute for most of the credit costs of people appear to have peaked. Credit costs in cards and personal loans have plateaued, but we are seeing some stress in the retail commercial vehicle portfolio," said Ashok Vaswani, MD&CEO, Kotak Mahindra Bank.

 

The bank reported 13 per cent Y-o-Y and 3 per cent sequential growth in gross advances at ₹4.59 trillion in Q1FY26, with home loans growing at 19 per cent Y-o-Y to ₹1.32 trillion and corporate banking growing 10 per cent Y-o-Y to ₹1.03 trillion. Home loans and corporate banking are top two segments in terms of advances. Among other segments, credit cards de-grew by 12 per cent Y-o-Y to ₹12,924 crore.

 

The bank’s consumer banking portfolio (includes home loans) recorded 16 per cent Y-o-Y growth, while commercial banking portfolio grew 5 per cent Y-o-Y and wholesale banking,which includes corporate banking, grew 13 per cent Y-o-Y. Credit substitutes also grew 14 per cent Y-o-Y during the period. Overall, net advances of the bank grew 14 per cent Y-o-Y and 4 per cent sequentially to ₹4.45 trillion at the end of Q1FY26.

 

The bank’s unsecured retail advances, including retail microcredit, as a percentage of net advances was down at 9.7 per cent in Q1, compared to 11.6 per cent a year ago and 10.5 per cent in Q4FY25.

 

Deposits of the bank grew 13 per cent Y-o-Y during the period to ₹4.92 trillion, with term deposits growing by 19 per cent Y-o-Y to ₹3 trillion. The current account savings account (CASA) ratio of the bank stood at 40.9 per cent in Q1FY26, down from 43.4 per cent in Q1FY25, and 43 per cent in Q4FY25.

 

The bank reported a credit to deposit ratio of 86.7 per cent at the end of Q1. The bank’s capital adequacy improved 60 basis points on a Y-o-Y basis to 23 per cent at the end of Q1, with CET1 ratio at 21.8 per cent.  "Despite the dynamic macro economic environment, we have continued to grow well”, Vaswani said, adding that with the peaking of credit cost in the micro finance business, and with incremental slippage on the decline, the bank has cautiously resumed fresh disbursements in the microrfinance space. He further added that Credit cards fulfil a very important need for the bank’s target customers, and the bank has launched new card products, Solitaire and Kotak Indigo, to cater to its customers' needs with more initiatives lined up in the next few quarters. 

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  (Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)