Kotak Mahindra Bank on Saturday reported a 10 per cent year-on-year (Y-o-Y) increase in consolidated net profit to Rs 5,423 crore in the fourth quarter of FY26 (Q4FY26). On a standalone basis, net profit rose 13 per cent Y-o-Y to Rs 4,027 crore, against Rs 3,552 crore in Q4FY25, aided by a sharp decline in provisions and improving asset quality.
Net interest income (NII) grew 8 per cent Y-o-Y to Rs 7,876 crore, supported by strong loan growth, though other income slipped 2 per cent YoY to Rs 3,116 crore.
Net interest margin (NIM) improved 13 basis points (bps) sequentially to 4.67 per cent, though it remained 30 bps lower on a Y-o-Y basis — against 4.97 per cent in Q4FY25. The bank’s management indicated a more gradual decline in margins going forward, as deposit repricing begins to pick up in the second half of the year.
Provisions and contingencies fell sharply — down 43 per cent Y-o-Y to Rs 516 crore in Q4FY26, compared to Rs 810 crore in Q3FY26 and Rs 909 crore in Q4FY25.
Slippages, too, moderated to Rs 1,018 crore from Rs 1,605 crore in Q3FY26 and Rs 1,488 crore in Q4FY25.
Asset quality improved across metrics. The gross non-performing asset (GNPA) ratio narrowed 10 basis points (bps) sequentially to 1.20 per cent, while the net NPA ratio improved 6 bps sequentially to 0.25 per cent.
Advances grew 16 per cent Y-o-Y and 3 per cent sequentially to Rs 5.14 trillion. Within segments, SME led growth at 19 per cent Y-o-Y, followed by the corporate book at 22 per cent Y-o-Y (though it declined sequentially), consumer banking at 14 per cent Y-o-Y, and commercial banking at 8 per cent Y-o-Y.
On the corporate book’s sequential dip, Paritosh Kashyap, whole-time director, Kotak Mahindra Bank said: “In Q4, interest rates typically rise towards the end of the year. Considering the credit quality of our corporate customers, to whom we can lend, it needs to make commercial sense for us to continue doing so. When we find that margins are shrinking, the loan book comes down. However, we usually catch up in the early part of the year. So, this is largely a situation arising from the high interest costs in the last quarter, particularly in the final month.”
Total deposits rose 15 per cent Y-o-Y to Rs 5.72 trillion. The CASA ratio stood at 43.3 per cent and the credit-to-deposit (CD) ratio at 86.6 per cent at the end of the quarter.
On the potential impact of the West Asian conflict, Ashok Vaswani, managing director and chief executive officer, Kotak Mahindra Bank, said the situation has kept management closely engaged. While supply chain disruptions have emerged, these are yet to reflect in the bank’s portfolio.
“There is no indicator within the portfolio suggesting that we should take a different course of action. Having said that, it would be naive to assume there is no impact. Depending on how long this situation persists, the impact could be more prolonged. Therefore, we are being extremely cautious. In the first instance, we have stepped up monitoring across all our portfolios to assess any changes in customer behaviour. We are also in constant communication with our customers to ensure they are comfortable and to understand what contingency plans they have in place,” Vaswani said.
He flagged second-order risks as a particular concern: “What concerns us most is the possibility of second- or third-order effects — impacts that are not immediately visible but emerge unexpectedly. That is something we are particularly mindful of. Typically, in such situations, the bottom end is affected first, so we are monitoring that segment more carefully and closely.”
On inorganic growth, Vaswani said the bank is actively scanning for acquisition opportunities but applies a three-part test before proceeding.
“For every single opportunity, we ask three questions: does it make strategic sense? If it makes strategic sense, does it make financial sense? And three, is it a major distraction for management? If the answer to the strategic sense is yes, the answer to the financial sense is yes, and the answer to the third question is no, we will do a transaction. For every single transaction that comes up, we will evaluate against these three criteria and take action accordingly.”
Vaswani confirmed the same framework would apply to Deutsche Bank’s India retail portfolio, which Kotak is reported to be eyeing.
On the bank’s decision to pass on IDBI Bank, he said: “Look, as far as IDBI is concerned, we looked at everything. From a valuation perspective, it was clearly very high. Even through the processes that were put in place, the bids received by the government were, frankly, lower, while the overall valuation remained very elevated. It was not a slam dunk from a strategic standpoint. Of course, it would have given us some scale, but it wasn’t compelling enough to be a must-do for us. Given the high valuation, it would also have been difficult to absorb. Therefore, on that basis, frankly, it did not work for us.”
(Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)
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