Kotak Bank Q2 Profit Surges 29% to ₹4,212 Cr as Bad Loans Shrink
Kotak Mahindra Bank posted a stellar 29% surge in standalone net profit to ₹4,212 crore for Q2 FY27, supported by a 16% rise in Net Interest Income and improving Gross NPAs at 1.04%, even as Net Interest Margin softened to 4.31% on foreign currency deposit inflows.
Private sector lender Kotak Mahindra Bank delivered a robust financial performance for the second quarter of fiscal year 2026-27 on Saturday, October 24, 2026, driven by strong core lending operations and sustained asset quality improvements. The bank’s standalone net profit registered a notable 29 percent year-on-year increase to ₹4,212 crore for the July-September quarter, advancing from ₹3,253 crore recorded during the corresponding period of the previous fiscal year and marking a sequential uptick of 2 percent over the ₹4,123 crore reported in the first quarter. On a consolidated basis, net profit expanded 26 percent year-on-year to ₹5,645 crore compared to ₹4,468 crore a year ago, reflecting a 3 percent rise quarter-on-quarter. The lender's primary operational engine remained solid, with Net Interest Income (NII) advancing 16 percent year-on-year, bolstering total banking revenues across retail and corporate banking segments.
Asset Quality Strengthens as Gross NPA Dips to 1.04%; Sequential Provisions Climb 20%
The lender reported noticeable sequential progress across its credit quality indicators during the September quarter, even as overall balance-sheet expansion reflected in absolute NPA tallies. Standalone Gross Non-Performing Assets (GNPA) improved to 1.04 percent of gross advances, declining from 1.18 percent in the previous quarter, while Net NPA contracted to 0.24 percent compared to 0.27 percent in Q1. In absolute terms, standalone bad loans stood at ₹8,459 crore, representing a 16 percent increase from ₹7,311 crore in the year-ago period and a 7 percent sequential increase from ₹7,928 crore. On credit risk management, the bank allocated standalone provisions of ₹803 crore during the quarter. While this represented a 15 percent decline compared to the ₹947 crore set aside in the corresponding quarter last year, provisions rose approximately 20 percent on a sequential basis from ₹668 crore in Q1, indicating cautious risk absorption by the management against prospective delinquencies.
FCNR(B) Inflows Compress Net Interest Margin to 4.31% as Operating Efficiency Improves
Despite top-line momentum, the bank's core Net Interest Margin (NIM) softened to 4.31 percent in the second quarter, compressing from 4.54 percent in the same quarter last fiscal and 4.53 percent in the preceding quarter. The bank noted that margin yields faced temporary downward pressure primarily due to a substantial increase in Foreign Currency Non-Resident Bank [FCNR(B)] deposits raised from overseas Indian clients. Cost of funds stood at 4.52 percent, an improvement compared to 4.70 percent in Q2 last year, though marginally higher than the 4.46 percent reported in Q1. Ancillary revenue streams provided substantial support, as income from fees and services surged 21 percent year-on-year and 17 percent sequentially to ₹2,926 crore. While standalone operating expenses expanded 14 percent year-on-year to ₹5,271 crore, overall operational efficiency improved, with the bank's cost-to-assets ratio falling to 2.40 percent from 2.67 percent a year ago and 2.66 percent in the previous quarter, demonstrating tighter expense control relative to total balance-sheet scale.
