Kotak Mahindra Bank has disclosed its financial outcomes for the first quarter of FY26 (April–June 2025), indicating a mixed performance. Although the Net Interest Income (NII) experienced notable growth, the Net Profit After Tax (PAT) fell by 7% year-on-year (YoY), mainly due to increased provisions and the lack of exceptional gains seen in the previous year.
Let us delve into the details of Kotak Mahindra Bank‘s Q1 performance.
Kotak Mahindra Bank Q1 FY26 Results – Summary Table
| Metric | Q1 FY26 | Q1 FY25 | Change (YoY) |
| Standalone Net Profit (PAT) | ₹3,282 crore | ₹3,520 crore | ↓ 7% |
| Net Interest Income (NII) | ₹7,259 crore | ₹6,842 crore | ↑ 6% |
| Net Interest Margin (NIM) | 4.65% | 5.02% | ↓ 37 bps |
| Provision & Contingencies | ₹1,208 crore | ₹578 crore | ↑ 109% |
| Cost-to-Income Ratio | 46.19% | — | — |
| Return on Equity (ROE) | 10.94% | 13.91% | ↓ 297 bps |
| Gross NPA (GNPA) | 1.48% | 1.39% | ↑ 9 bps |
| Net NPA (NNPA) | 0.34% | 0.34% | No change |
| CASA Ratio | 40.9% | 43.4% | ↓ 250 bps |
| Customer Assets | ₹4.93 trillion | — | ↑ 13% |
| Net Advances | ₹4.45 trillion | ₹3.90 trillion (approx.) | ↑ 14% |
| Loan-to-Deposit Ratio (LDR) | 86.7% | — | — |
| Capital Adequacy Ratio (CAR) | 23.0% | 23.0% | ↑ 60 bps |
| Total Deposits | ₹4.92 trillion | ₹4.35 trillion (approx.) | ↑ 13% |
| CET1 Ratio | 21.8% | — | — |
Net Profit Decreases by 7% Due to One-Time Gains in the Previous Year
Kotak Mahindra Bank reported a standalone net profit of ₹3,282 crore in Q1 FY26, a decrease from ₹3,520 crore in the same quarter of the previous year. The prior year’s figure included a one-off gain from the divestiture of Kotak General Insurance (KGI), which was not replicated this year.
In fact, when excluding the exceptional gain, the decline in net profit more accurately reflects the bank’s core performance. When considering the one-time gain, the unadjusted net profit was ₹6,250 crore—a stark contrast to the adjusted profit.
Interest Income Continues to Be a Strong Foundation
Despite the pressures on profit, Kotak’s core banking operations remained stable:
- The Net Interest Income (NII) increased by 6% YoY to ₹7,259 crore, up from ₹6,842 crore in Q1 FY25.
- The Net Interest Margin (NIM) stayed robust at 4.65%, although it slightly decreased from 5.02% in Q1 FY25.
NIM is a vital indicator of banking profitability, representing the difference between interest earned and interest paid.
Kotak Subsidiaries – Key Metrics
| Subsidiary | Q1 FY26 PAT | YoY Growth | Highlights |
| Kotak AMC | ₹326 crore | ↑ 86% | Equity AUM: ₹3.33T; Total AUM: ₹5.25T |
| Kotak Mahindra Prime | ₹272 crore | ↑ 17% | Customer Assets: ₹41,469 crore; ROA: 2.4%; CAR: 23.5% |
| Kotak Securities | ₹465 crore | ↑ 16% | Market Share: 12.8%; Cash: 10.1%; Derivatives: 14.3% |
| Kotak Life Insurance | ₹327 crore | ↑ 88% | AUM: ₹96,581 crore; Solvency Ratio: 2.40x |
Increased Provisions Affect Profitability
The Kotak Mahindra Bank Q1 significant impact on profitability stemmed from a sharp rise in provisioning:
- Provisions and contingencies surged by 109% YoY, reaching ₹1,208 crore.
- This increase was attributed to a rise in slippages, meaning loans that have become non-performing.
This is in comparison to ₹578 crore in Q1 FY25 and ₹909 crore in Q4 FY25, indicating a steep sequential rise.
Asset Quality Shows Minor Weakness
While Kotak Mahindra Bank Q1 asset quality is still well-managed, there has been a minor decline:
- Gross NPA Ratio rose to 1.48% from 1.39% year-on-year.
- Net NPA Ratio held steady at 0.34%.
- Slippages for Q1 FY26: ₹1,812 crore (↑33% year-on-year, ↑22% quarter-on-quarter)
The bank’s credit cost increased to 0.93%, compared to 0.55% in Q1 FY25 and 0.64% in Q4 FY25.
Loan Portfolio Grows Across Various Segments
Kotak Bank Net Profit Q1 2025 announced significant growth in its loan portfolio:
- Gross Advances: ₹4.59 trillion (↑13% year-on-year)
- Net Advances: ₹4.45 trillion (↑14% year-on-year, ↑4% quarter-on-quarter)
- Home Loans: ₹1.32 trillion (↑19% year-on-year)
- Corporate Banking: ₹1.03 trillion (↑10% year-on-year)
- Credit Cards: ₹12,924 crore (↑12% year-on-year)
Growth by Segment:
- Consumer Banking Portfolio: ↑16% year-on-year
- Commercial Banking Portfolio: ↑5% year-on-year
- Wholesale Banking Portfolio: ↑13% year-on-year
Deposit Growth and CASA Ratio
The Kotak Mahindra Bank experienced strong growth in deposits:
- Total Deposits: ₹4.92 trillion (↑13% year-on-year)
- Term Deposits: ₹3 trillion (↑19% year-on-year)
- CASA Ratio: Decreased to 40.9% from 43.4% year-on-year
The drop in CASA suggests a transition in the deposit mix towards term deposits, likely influenced by increased interest rate offerings.
Capital Adequacy Remains Robust
Kotak Mahindra Bank is well-capitalized:
- Capital Adequacy Ratio (CAR): 23% (↑60 bps year-on-year)
- CET1 Ratio: 21.8%
These figures are comfortably above regulatory standards, providing ample room for growth.
Consolidated Performance: Net Profit Declines by 40% Year-on-Year
On a consolidated level (including subsidiaries), the Kotak Mahindra Bank has reported:
- Net Profit: ₹4,472 crore (↓40% Year-on-Year from ₹7,448 crore)
- This decrease is attributed to the previous year’s gain of ₹3,013 crore from the divestment of a 70% stake in KGI to Zurich Insurance.
When excluding the one-time gain, the consolidated net profit increased by 1% Year-on-Year from ₹4,435 crore in Q1 FY25.
Assets Under Management (AUM) Increase to ₹7.5 Trillion
The total AUM across the Kotak Group has risen by 18% Year-on-Year to ₹7.5 trillion, up from ₹6.36 trillion. This encompasses:
- The total AUM across the Kotak Group has risen by 18% Year-on-Year to ₹7.5 trillion, up from ₹6.36 trillion. This encompasses:
Kotak Subsidiaries Demonstrate Strong Growth
1. Kotak Asset Management Company (AMC)
- PAT: ₹326 crore (↑86% Year-on-Year)
- Equity AUM Growth: ↑24% to ₹3.33 trillion
- Total AUM: ₹5.25 trillion
- SIP Inflows: ₹1,792 crore
- Retail Investor Share: 57%
2. Kotak Mahindra Prime (Vehicle & Asset Finance)
- PAT: ₹272 crore (↑17% Year-on-Year)
- Customer Assets: ₹41,469 crore (↑16%)
- ROA: 2.4%
- Capital Adequacy Ratio: 23.5%
3. Kotak Securities
- PAT: ₹465 crore (↑16% Year-on-Year)
- Market Share: 12.8%
- Cash: 10.1%
- Derivatives: 14.3%
4. Kotak Mahindra Life Insurance
- PAT: ₹327 crore (↑88% Year-on-Year)
- Gross Written Premium: ₹2,861 crore
- AUM: ₹96,581 crore (↑14.7% Year-on-Year)
- Solvency Ratio: 2.40x
- Individual Regular Premium Share (Traditional Products): 63.1%
Strategic Developments & Outlook
- ZKGI, the insurance division, ceased to be a wholly-owned subsidiary on June 18, 2024, and is now categorized as an associate.
- Loan-to-Deposit Ratio: 86.7%
- Retail Unsecured Loans (as a percentage of Net Advances): Decreased to 9.7% from 11.6% Year-on-Year
The bank seems to be adopting a more conservative approach to risk management, particularly in the retail unsecured lending sector.
Strong Core, Ongoing Pressures
Although Kotak Mahindra Bank’s core banking functions remain robust, challenges from increased provisions, asset quality issues, and the absence of extraordinary gains have impacted profitability. Nevertheless, there is notable growth in customer assets, net advances, and performance from subsidiaries.