Why Did Kotak Mahindra Bank's Q2 Net Profit Fall by 2.7% to Rs 3,253 Crore?
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Synopsis
In a surprising turn, Kotak Mahindra Bank has reported a decline in its net profit for Q2 FY26. However, several key metrics indicate that the bank's overall health remains strong. Dive into the details of their financial performance and what it means for the future.
Key Takeaways
- Net profit decreased by 2.7% to Rs 3,253 crore.
- Net interest income rose by 4% to Rs 7,311 crore.
- Advances expanded by 16% to Rs 4,62,688 crore.
- GNPA ratio improved to 1.39%.
- CASA ratio stood at 42.3%.
Mumbai, Oct 25 (NationPress) - The private sector bank, Kotak Mahindra Bank, disclosed a 2.7% year-on-year (YoY) reduction in its net profit, totaling Rs 3,253 crore for the period of July to September (Q2 FY26). This marks a decline from the Rs 3,344 crore profit reported in the same timeframe last year.
Despite this slight dip in profitability, the bank's net interest income (NII) witnessed a growth of 4% on a YoY basis, reaching Rs 7,311 crore compared to Rs 7,020 crore in Q2 FY25, while the net interest margin (NIM) was a robust 4.54%.
The lender's advances portfolio grew significantly, expanding by 16% YoY to Rs 4,62,688 crore (as of September 30), up from Rs 3,99,522 crore a year prior, indicating sustained credit demand.
On the liabilities front, average total deposits surged by 14% YoY to Rs 5,10,538 crore, in contrast to Rs 4,46,110 crore in Q2 FY25. The average current deposits also increased by 14% to Rs 70,220 crore from Rs 61,853 crore in the same quarter last year.
Asset quality improved further, with the gross non-performing assets (GNPA) ratio decreasing to 1.39% as of September 30, 2025, down from 1.49% a year earlier.
The Net NPA (NNPA) ratio also saw enhancement, dropping to 0.32% from 0.43% during the same period. The bank's Provision Coverage Ratio (PCR) remained strong at 77%.
According to its exchange filing, the CASA ratio (as of September 30) was at 42.3%, while the Credit to Deposit ratio stood at 87.5%. The standalone Return on Assets (ROA) for Q2 FY26 (annualized) was 1.88%, and the Return on Equity (ROE) was 10.38% on an annualized basis.
Point of View
It is crucial to understand that while Kotak Mahindra Bank's recent profit decline may raise eyebrows, the underlying metrics suggest a resilient institution. The growth in net interest income and advances points to a robust demand for credit, indicating that the bank is well-positioned amidst market fluctuations.
NationPress
26/10/2025
Frequently Asked Questions
What caused the decline in Kotak Mahindra Bank's net profit?
The decline of 2.7% in net profit can be attributed to various market factors, even as the bank reported growth in net interest income and advances.
How did the bank's net interest income perform?
Kotak Mahindra Bank's net interest income increased by 4% to Rs 7,311 crore, showcasing strong performance despite the profit dip.
What does the growth in advances indicate?
The 16% expansion in advances indicates a robust credit demand, reflecting the bank's ability to attract borrowers.
How is the asset quality of Kotak Mahindra Bank?
The asset quality has improved, with the GNPA ratio declining to 1.39%, indicating better management of non-performing assets.
What are the key metrics for Kotak Mahindra Bank?
Key metrics include a CASA ratio of 42.3%, an ROA of 1.88%, and a ROE of 10.38%, all indicating a solid financial position.
