Kotak Mahindra Bank Reports 29% Rise in Q2 Net Profit, Surpassing Market Estimates

MUMBAI — Kotak Mahindra Bank reported a higher-than-expected quarterly profit on Saturday, supported by stronger loan demand and lower provisions for potential bad loans. India's third-largest private lender by market capitalisation posted a stand-alone net profit of ₹4,211 crore ($443.5 million) for the three months ended September, compared to ₹3,253 crore recorded during the same period last year.

The financial performance surpassed analyst expectations. According to data compiled by LSEG, analysts had anticipated a profit of ₹4,104 crore for the quarter.

Indian banks experienced strong loan growth during the financial second quarter across both corporate and retail segments. Additionally, lending against foreign-currency non-resident deposits contributed to overall growth. The Reserve Bank of India introduced measures in June, including concessional hedging facilities and swap arrangements, aimed at attracting foreign currency deposits.

Kotak Bank reported a 16 per cent increase in net interest income, reaching ₹8,460 crore. This growth was aided by a 25 per cent rise in domestic loans, while deposits grew by 23 per cent.

The bank's net interest margin, a key measure of profitability, declined to 4.31 per cent from 4.35 per cent three months earlier. The drop was attributed to foreign-currency non-resident deposit mobilisation during the quarter.

Funds kept aside for potential bad loans and other losses decreased by 15 per cent to ₹8,040 crore. Meanwhile, other income—which includes returns from bonds and other investments—rose 23 per cent year-on-year to ₹3,194 crore amid volatile currency and debt markets.

The asset quality of the Mumbai-based lender improved marginally during the quarter. The gross non-performing asset ratio stood at 1.04 per cent at the end of September, compared with 1.18 per cent in the preceding three months.

"Kotak Mahindra Bank's Q2 performance reflects the broader credit expansion seen across the Indian banking sector during the quarter. A 29% increase in net profit, backed by robust domestic loan growth and lower bad loan provisions, demonstrates strong fundamental execution. While net interest margins faced minor pressure due to foreign-currency deposit mobilisation, the bank's improving asset quality and disciplined provisioning highlight a stable financial trajectory amidst evolving market conditions." — Dr. Shishir Gupta, Founder & CEO, StartupLanes