Kotak Mahindra Bank Q2 Profit Rises 29% to ₹4,212 Crore; NIM Narrows

Kotak Mahindra Bank Q2 profit rose 29% year-on-year to ₹4,212 crore on a standalone basis for the quarter ended September, the bank told the stock exchanges on Saturday, October 24.

Consolidated profit, which includes its securities, insurance and asset management businesses, increased 26% to ₹5,645 crore against ₹4,468 crore a year earlier. On a sequential basis, profit grew 2% on a standalone basis and 3% on a consolidated basis.

Net interest income (NII) increased 16% to ₹8,459 crore, compared with ₹7,311 crore in the year-ago quarter. Operating profit rose 21% to ₹6,382 crore.

Kotak Mahindra Bank Q2 profit: margins and FCNR deposits

The growth came with some margin pressure. Net interest margin (NIM) declined to 4.31%, compared with 4.54% a year earlier and 4.53% in the June quarter.

The bank attributed the decline largely to the inflow of foreign currency non-resident (FCNR(B)) deposits during the quarter. It raised around ₹55,344 crore through these deposits, according to its Q2 FY27 press release.

With these deposits coming in, the balance sheet expanded. Total deposits stood at ₹6,51,491 crore as of September 30, 2026, up 23% year-on-year, or 13% excluding FCNR(B) deposits.

Net advances increased 25% to ₹5,77,295 crore. Excluding loans against FCNR(B) deposits and the portfolio bought from Kotak Mahindra Investments, loan growth was 19%.

The current account-savings account (CASA) ratio declined to 38.2% from 42.3% in the same period last year, though it was 41.8% excluding FCNR(B) deposits. The cost of funds stood at 4.52%, compared with 4.70% a year ago and 4.46% in the previous quarter, according to Business Standard.

Asset quality improves as provisions fall

Credit costs declined during the quarter. Provisions fell 15% year-on-year to ₹803 crore, though they were up from ₹668 crore in the June quarter. Annualised credit cost stood at 0.35%, compared with 0.79% a year earlier.

Gross non-performing assets (NPA) came down to 1.04% of advances from 1.39% a year ago, and net NPA eased to 0.24% from 0.32%. Slippages fell 24% to ₹1,230 crore, while the provision coverage ratio was 78%.

Fee and services income increased 21% to ₹2,926 crore. The bank is well capitalised, with a standalone capital adequacy ratio of 21.9% and a CET1 ratio of 21.4%. Standalone return on assets was 1.92%.

Among subsidiaries, Kotak Securities made a profit of ₹348 crore for the quarter and Kotak Mahindra Prime ₹251 crore. Kotak Mahindra Life Insurance earned ₹198 crore, and the asset management and trustee business reported ₹287 crore.

Why it matters and what comes next

The lender started as Kotak Mahindra Finance in 1985 and converted into a bank in 2003, becoming the first non-banking finance company in India to do so. Founder Uday Kotak stepped down as CEO in 2023. The group today spans lending, broking, insurance and asset management.

For investors, the key takeaway from the Kotak Mahindra Bank Q2 profit numbers is healthy loan growth with bad loans under control. The cost is pricing: FCNR(B) deposits are a more expensive source of funds and have weighed on the margin and the CASA ratio, both closely tracked by investors.

These numbers come after HDFC Bank’s Q2 results and ICICI Bank’s Q2 results earlier this month, giving investors a better view of how large private banks are growing their books and managing funding costs.

The results also coincide with a change at the top. Managing Director and CEO Ashok Vaswani is not seeking another term when his tenure ends in December 2026. The Reserve Bank of India has approved Anup Kumar Saha, currently a whole-time director overseeing retail banking, as the next MD and CEO for three years from January 1, 2027.

Since the results were released over the weekend, the stock’s reaction will show when markets open on Monday. Investors will watch whether the margin recovers as FCNR(B) inflows settle, and how the incoming management handles deposit costs and growth.

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Internal links used: https://ceoreviewmagazine.com/news/hdfc-bank-q2-fy27-results-net-profit/, https://ceoreviewmagazine.com/news/icici-bank-q2-fy27-results-net-profit/

Note: Kotak figures cross-checked against the bank’s Q2 FY27 press release. Cost of funds, credit cost, PCR, ROA and subsidiary profits are from Business Standard (not in the press release excerpt read). Phrasly humanization completed for all paragraphs, then manually corrected for facts and grammar (humanizer had introduced errors, e.g. “previous quarter” for year-ago and “profit before taxes” for operating profit — fixed). Phrasly AI-detection not run (human-verification gate).

Sources (fact-check):

• https://www.kotak.bank.in/content/dam/Kotak/investor-relation/Financial-Result/QuarterlyReport/FY-2027/q2/PressRelease/Q2FY27-Press-Release.pdf
• https://www.business-standard.com/companies/quarterly-results/kotak-mahindra-bank-q2-fy27-profit-nii-fcnr-deposits-asset-quality-126102400637_1.html
• https://www.aninews.in/news/business/kotak-mahindra-bank-q2-standalone-profit-rises-29-to-rs-4212-crore-net-interest-margin-narrows20261024194329/
• https://www.business-standard.com/industry/banking/kotak-mahindra-bank-anup-kumar-saha-md-ceo-rbi-approval-126100100123_1.html
• https://www.freepressjournal.in/business/kotak-mahindra-bank-stock-falls-over-2-as-ceo-ashok-vaswani-to-exit-by-year-end