Kotak Mahindra Bank’s Q2 Profit Dips Amid Higher Provisions; Steady Loan and Deposit Growth Boost Performance

Kotak Mahindra Bank on Saturday reported a dip in quarterly profit, as higher provisioning for potential loan losses offset steady growth in lending and deposits.

The private sector lender posted a standalone net profit of Rs 3,253 crore for the quarter ended September 30, marginally lower than Rs 3,344 crore in the same period last year. The figure fell short of analysts’ expectations of about Rs 3,449 crore, according to estimates compiled by LSEG.

The bank’s provisions for bad loans and contingencies surged 43% year-on-year to Rs 947 crore, putting pressure on overall profitability.

Despite this, net interest income (NII) — the difference between interest earned and paid — increased 4% to Rs 7,311 crore, driven by a 14% rise in advances. Corporate loans, which contribute around one-fifth of Kotak’s portfolio, expanded 17%, while retail and consumer loans, accounting for nearly half of the total, grew 16% during the quarter.

“We are now focusing on gradually rebuilding our retail unsecured portfolio,” said Ashok Vaswani, Chief Executive Officer of Kotak Mahindra Bank, during a post-earnings interaction.

Also Read: From A 200-Sq-Ft Office To India’s Most Profitable Private Bank: How Uday Kotak Built Kotak Mahindra | Republic World

Total deposits rose 15% compared to the year-ago quarter, reflecting continued traction in customer savings and term deposits.

According to Devang Gheewalla, the bank’s Chief Financial Officer, loan disbursements are seeing an uptick across several segments. “Beyond credit cards, we’re witnessing renewed momentum in personal loans and a steady recovery in our microfinance book,” he said.

The bank’s net interest margin (NIM), a key indicator of profitability, stood at 4.54%, down from 4.91% a year earlier. The compression reflects the impact of the Reserve Bank of India’s cumulative 100 basis point rate cut this year, which has narrowed the spread between lending and deposit rates.

On the asset quality front, Kotak reported an improvement, with its gross non-performing asset (GNPA) ratio easing to 1.39% from 1.48% in the previous quarter and 1.49% a year ago.

Meanwhile, the bank announced the reappointment of C.S. Rajan as Chairman of the board for a three-year term ending in October 2027, following approval from the RBI.

Analysts expect loan growth to strengthen in the second half of FY26 as credit demand revives, aided by recent fiscal measures and improving consumption trends. (With inputs from Reuters)