Kotak Mahindra Bank reported a 26.3% year-on-year increase in consolidated net profit to ₹5,645 crore for the second quarter of financial year 2026-27, supported by stronger income and lower provisions. The Mumbai-based private lender’s consolidated profit rose from ₹4,468 crore in Q2 FY26, while standalone net profit increased approximately 29% to ₹4,212 crore.
The results for the quarter ended September 30, 2026, showed continued growth in lending and deposits alongside improving asset quality. However, the bank’s net interest margin declined to 4.31%, partly because of substantial foreign currency non-resident bank deposit inflows. The results therefore present a mixed picture: stronger earnings and healthier reported loan quality, but continued pressure on a key measure of lending profitability.
Key Takeaways
- Consolidated net profit: Increased 26.3% year-on-year to ₹5,645 crore.
- Standalone net profit: Rose approximately 29.5% to ₹4,212 crore.
- Net interest income: Grew 15.7% year-on-year to ₹8,459 crore on a standalone basis.
- Net interest margin: Declined to 4.31% from 4.54% a year earlier.
- Loan growth: Net advances increased approximately 25% to ₹5.77 lakh crore.
- Deposit growth: Total deposits rose approximately 23% to ₹6.51 lakh crore.
- Asset quality: Gross NPA ratio improved to 1.04%, while net NPA fell to 0.24%.
Kotak Mahindra Bank Q2 FY27 Results: Key Numbers
The following table summarizes the bank’s performance during the July–September 2026 quarter.
| Financial metric | Q2 FY27 | Q2 FY26 | Year-on-year change |
|---|---|---|---|
| Consolidated net profit | ₹5,645 crore | ₹4,468 crore | +26.3% |
| Standalone net profit | ₹4,212 crore | ₹3,253 crore | +29.5% |
| Standalone net interest income | ₹8,459 crore | ₹7,311 crore | +15.7% |
| Consolidated total income | ₹29,427 crore | ₹24,901 crore | +18.2% |
| Standalone net interest margin | 4.31% | 4.54% | -0.23 percentage points |
| Standalone provisions | ₹803 crore | ₹947 crore | -15.2% |
| Gross NPA ratio | 1.04% | 1.39% | Improved |
| Net NPA ratio | 0.24% | 0.32% | Improved |
Sources: Business Standard and Financial Express. Figures are rounded; net interest income, margin and provisions are standalone figures unless otherwise indicated.
What Drove Kotak Mahindra Bank’s Profit Growth?
The bank’s earnings growth reflected stronger interest income, lower provisions for potential loan losses and improved asset quality.
On a standalone basis, net profit increased from ₹3,253 crore in Q2 FY26 to approximately ₹4,212 crore in Q2 FY27. Net interest income, which measures the difference between interest earned on loans and investments and interest paid on deposits and borrowings, rose 15.7% to ₹8,459 crore.
Lower provisions also supported profitability. Standalone provisions declined approximately 15.2% year-on-year to ₹803 crore from ₹947 crore. Provisions represent money set aside to cover potential losses from borrowers who may not repay their loans.
Fee and services income increased 21% to ₹2,926 crore, providing another source of revenue. Operating expenses, however, rose 14% to ₹5,271 crore, reflecting the costs associated with running and expanding the business.
The combination of stronger core income and lower provisions helped the bank deliver faster growth in net profit than in net interest income.
Net Interest Margin Falls to 4.31%
Despite the increase in earnings, Kotak Mahindra Bank’s net interest margin declined to 4.31% in Q2 FY27 from 4.54% in the year-ago quarter and 4.53% in Q1 FY27.
Net interest margin, or NIM, measures the income a bank earns from interest-bearing assets relative to those assets. It is an important indicator of how efficiently a lender converts its balance sheet into interest income.
The bank attributed much of the quarterly moderation to the mobilisation of FCNR(B) deposits. These are foreign-currency deposits held by eligible non-resident customers.
Kotak mobilised approximately ₹55,344 crore in FCNR(B) deposits during the quarter and extended around ₹16,110 crore in loans through its international branches.
Such inflows can strengthen funding availability and support lending. However, the economics of foreign-currency deposits and the corresponding assets can differ from those of the bank’s domestic rupee business. This can affect reported margins and balance-sheet ratios.
The key question for future quarters is whether the bank can deploy these funds profitably while maintaining its overall funding costs and lending margins.
Loans and Deposits Continue to Expand
Kotak Mahindra Bank recorded strong growth in both advances and deposits, reflecting expansion in its core banking operations.
| Balance-sheet metric | September 2026 | Year-on-year growth |
|---|---|---|
| Net advances | ₹5.77 lakh crore | Approximately 25% |
| Total deposits | ₹6.51 lakh crore | Approximately 23% |
| CASA ratio | 38.2% | Lower than a year earlier |
| Credit-to-deposit ratio | 88.6% | Up from 87.5% |
Source: Business Standard.
Net advances grew approximately 25% to ₹5.77 lakh crore. Excluding loans against FCNR(B) deposits and the acquired Kotak Mahindra Investments loan portfolio, advances grew 19%, according to the bank’s reported figures.
Total deposits increased approximately 23% to ₹6.51 lakh crore. However, excluding FCNR(B) deposits, deposit growth was 13%.
The distinction matters because headline growth includes the impact of the large foreign-currency deposit inflows. Underlying growth excluding those deposits provides a different view of the bank’s domestic funding expansion.
The current account and savings account, or CASA, ratio declined to 38.2% from 42.3% a year earlier. CASA deposits are generally an important source of relatively low-cost funding for banks. Kotak said the decline was largely attributable to the increase in term deposits associated with FCNR(B) inflows. Excluding those deposits, the CASA ratio stood at 41.8%.
Asset Quality Improves as Bad-Loan Ratios Decline
Kotak Mahindra Bank reported an improvement in its asset-quality indicators during the quarter.
Gross non-performing assets, or GNPA, declined to 1.04% of advances from 1.39% in Q2 FY26. Net NPA fell to 0.24% from 0.32% over the same period.
The amount of new loan slippages—accounts that moved into non-performing status—declined 24% year-on-year to ₹1,230 crore. The annualised credit cost fell to 0.35% from 0.79% a year earlier, although it was higher than the previous quarter’s 0.46%.
The provision coverage ratio stood at 78%, compared with 77% a year earlier. This ratio indicates the extent to which a bank has made provisions against its gross non-performing loans.
Lower bad-loan ratios and credit costs can support profitability by reducing the amount of income that must be allocated to potential loan losses. Nevertheless, asset quality needs to be assessed over multiple quarters, particularly if lending growth accelerates or economic conditions change.
Subsidiaries Add to Consolidated Earnings
Kotak Mahindra Bank’s consolidated performance includes earnings from its subsidiaries and other group businesses.
During Q2 FY27, Kotak Securities reported a profit of ₹348 crore, while Kotak Mahindra Prime reported ₹251 crore. Kotak Mahindra Life Insurance recorded a profit of ₹198 crore.
Kotak Asset Management and Trustee Company reported earnings of ₹287 crore, while Kotak Alternate Asset Management reported ₹87 crore.
These businesses give the group exposure beyond conventional lending, including securities, vehicle finance, insurance and asset management. Their contribution helps explain why consolidated net profit is higher than the bank’s standalone profit.
Investors should distinguish between the two measures: standalone results describe the bank entity itself, while consolidated results reflect the wider group. The two figures should not be used interchangeably when assessing profitability.
The Bigger Picture
Kotak Mahindra Bank’s Q2 FY27 results demonstrate that strong profit growth can coexist with pressure on net interest margins. Higher interest income, fee revenue and lower provisions supported earnings, while large FCNR(B) inflows influenced the bank’s funding mix and key balance-sheet ratios.
The results also show why investors need to look beyond headline profit growth. Loan expansion, deposit composition, credit costs and asset quality help determine whether current earnings momentum can be sustained. A continuing decline in margins could constrain future growth, even if loan volumes rise.
FAQs
1. What was Kotak Mahindra Bank’s consolidated net profit in Q2 FY27?
Kotak Mahindra Bank reported consolidated net profit of ₹5,645 crore for Q2 FY27, up 26.3% from ₹4,468 crore in Q2 FY26.
2. What was the bank’s standalone net profit?
Standalone net profit rose approximately 29.5% year-on-year to ₹4,212 crore, compared with ₹3,253 crore in the corresponding quarter last year.
3. Why did Kotak Mahindra Bank’s net interest margin decline?
The bank attributed much of the decline to substantial FCNR(B) deposit mobilisation during the quarter. NIM fell to 4.31% from 4.54% a year earlier.
4. How did Kotak Mahindra Bank’s asset quality change?
The gross NPA ratio improved to 1.04% from 1.39%, while the net NPA ratio declined to 0.24% from 0.32%. Loan slippages also decreased year-on-year.
5. What should investors watch after the Q2 FY27 results?
Investors should monitor net interest margins, deposit growth excluding FCNR(B) inflows, loan growth, credit costs and asset quality. These indicators can help determine whether profit growth remains sustainable.
Looking Ahead
Kotak Mahindra Bank’s next quarterly results will show whether its earnings momentum can continue as the bank manages its expanded deposit base and pursues loan growth. A stabilisation in net interest margins, alongside continued improvement in credit quality, would be important indicators for the sustainability of profitability.
For investors, the central issue is the balance between growth and returns. Strong lending and deposit expansion can support long-term earnings, but the bank will need to deploy its funding efficiently and control operating costs to maintain profitability. The coming quarters should provide a clearer picture of how effectively it manages those priorities.
Get the day’s top stories in your inbox
One concise email. No spam, unsubscribe anytime.
