Kotak Mahindra Bank Q2 results, profit rises 26% to ₹5,645 crore

Kotak Mahindra Bank reported a 26% rise in consolidated net profit to ₹5,645 crore for the July to September quarter (Q2 FY27), up from ₹4,468 crore a year earlier, Business Standard and NewsBytes reported. The bank announced the results on Saturday, 24 October.

The core bank did even better: standalone profit rose about 29% to ₹4,212 crore, helped by lower provisions and 16% growth in net interest income, The Tribune and Zee Business reported. But the bank's net interest margin narrowed sharply, which analysts will watch closely.

Key points

• Consolidated net profit: ₹5,645 crore, up 26% from ₹4,468 crore a year ago and up 3% from ₹5,480 crore in Q1.
• Standalone (bank) profit: ₹4,212 crore, up about 29%.
• Net interest income: ₹8,459 crore, up about 16% from ₹7,311 crore.
• Net interest margin: 4.31%, down from 4.54% a year ago and 4.53% in Q1.
• Gross NPA ratio: improved to 1.04% from 1.39% a year earlier.

Kotak Mahindra Bank Q2 results at a glance

Sources: Business Standard, The Tribune, Zee Business, NewsBytes. The year-ago standalone profit is derived from the reported 29% growth. Some reports put standalone growth at 29.5%.

For the first half of FY27 (April to September), consolidated net profit was about ₹11,126 crore, according to the bank's filing as reported by Investywise.

What drove the profit

Higher interest income: Net interest income, the difference between what the bank earns on loans and pays on deposits, grew about 16%. Zee Business said NII came in above Street estimates; analysts it surveyed had expected about ₹8,330 crore in NII and a standalone profit of about ₹4,290 crore.

Lower provisions: The bank set aside less money for bad loans than a year ago, which lifted profit. That reflects better asset quality: the gross NPA ratio fell to 1.04% from 1.39% a year earlier.

Subsidiaries: Kotak's consolidated profit includes its securities, asset management, insurance and other businesses. These added about ₹1,400 crore to the bank's own profit in the quarter, the gap between the consolidated and standalone figures.

Why the margin fell

The net interest margin, a key measure of how profitable a bank's lending is, fell to 4.31% from 4.53% in the previous quarter and 4.54% a year ago, Business Standard reported. The bank linked the dip partly to large inflows of FCNR(B) deposits, foreign currency deposits from non-resident Indians that carry costs and are typically parked in lower-yielding assets at first.

Margins have been under pressure across Indian banks as interest rates eased, because loan rates linked to benchmarks fall faster than deposit costs. Kotak's margin is still among the highest in Indian banking, but the fall of more than 20 basis points in a quarter is notable.

Banking terms in these results

• Net interest income (NII): what a bank earns in interest on loans and investments minus what it pays on deposits and borrowings. It is the main source of a bank's income.
• Net interest margin (NIM): NII as a share of the bank's interest-earning assets. A higher margin means more profitable lending.
• Provisions: money set aside to cover loans that may not be repaid. Lower provisions lift profit.
• Gross NPA ratio: the share of loans that have stopped being repaid (non-performing assets), before provisions. A lower ratio means better asset quality.
• FCNR(B) deposits: foreign currency deposits from non-resident Indians, held in currencies such as the US dollar, which protect depositors from rupee swings.
• Standalone vs consolidated: standalone is the bank alone; consolidated adds its subsidiaries in broking, mutual funds, insurance, vehicle finance and investment banking.

Kotak's recent history

Kotak Mahindra Bank was founded by Uday Kotak, who stepped down as managing director and CEO in 2023. Ashok Vaswani has led the bank as MD and CEO since January 2024. In April 2024, the Reserve Bank of India barred the bank from adding new customers through its online and mobile channels and from issuing new credit cards, over concerns about its IT systems. The RBI lifted those restrictions in February 2025, and the bank has since been rebuilding growth in its digital business.

What analysts will look for

Beyond the headline profit, analysts typically focus on a few questions after results like these:

• Margin outlook: whether the fall in net interest margin to 4.31% is a one-quarter effect of the FCNR(B) inflows or the start of a longer squeeze.
• Loan growth: how fast the bank is growing loans, especially unsecured personal loans and credit cards, after the end of the RBI restrictions on its digital channels.
• Deposit costs: whether the bank can raise low-cost current and savings account deposits fast enough to fund growth.
• Asset quality: whether the improvement in bad loans holds, particularly in microfinance and unsecured retail loans, where many lenders saw stress over the past year.
• Subsidiaries: how the broking, asset management and insurance businesses are doing, since they make up a large share of group profit.

The management's comments on these points on the earnings call will shape how the market reads the quarter, as much as the numbers themselves.

What it means

• For investors: Profit growth and better asset quality are positives; the margin squeeze is the main concern. Market reaction will show which weighs more.
• For borrowers and depositors: Margin pressure can make banks compete harder on deposit rates and be more careful on loan pricing.
• For NRIs: Strong FCNR(B) inflows show Kotak drawing significant NRI deposits, a segment banks have targeted as the rupee and global rates move.

National Diaries does not give investment advice. Speak to a SEBI-registered adviser before investing.

How the quarter compares with Q1

Compared with the April to June quarter, Kotak's consolidated profit rose about 3%, from ₹5,480 crore to ₹5,645 crore, while the margin fell more sharply, from 4.53% to 4.31%. That means profit growth this quarter came more from lower provisions and the subsidiaries than from the core business of lending, which is the main reason analysts are watching the margin so closely. If the margin recovers as the FCNR(B) money is put to work in higher-yielding loans, profit growth could speed up again in the second half of the year.

Other bank results this week

Kotak's results come in a busy week for bank earnings, with several private lenders reporting their July to September numbers. A common pattern this season has been profits helped by lower provisions for bad loans, alongside pressure on net interest margins as interest rates have eased. Kotak's quarter fits that pattern closely.

What happens next

Analysts will update their targets after the earnings call, focusing on the bank's guidance for margins and loan growth over the rest of the year. Kotak's shares will react to the results when markets open on Monday, 26 October.

Profit up, bad loans down, margins down. Kotak's quarter sums up where Indian private banking stands this year.