Kotak Mahindra Bank reported a 26% increase in consolidated net profit to ₹5,645 crore for the September quarter. Strong loan growth and higher fee income helped the bank. However, net interest margins fell to 4.31%. Managing director Ashok Vaswani said, "This quarter, we mobilised ₹55,000 crore through FCNR deposits."
Kotak Mahindra Bank reported a 26% increase in its consolidated net profit for the September quarter to ₹5,645 crore from ₹4,468 crore a year earlier, aided by strong loan growth, higher fee income and lower provisions. Net interest margins, however, narrowed as the share of low-cost deposits in its funding mix declined.
On a standalone basis, the private sector lender's net profit rose 29% to ₹4,212 crore from ₹3,253 crore in the second quarter of FY26.
Net interest income (NII) increased 16% year-on-year to ₹8,459 crore from ₹7,311 crore. Net interest margin (NIM), however, contracted 23 basis points to 4.31% from 4.54%, even as the cost of funds fell 18 basis points year-on-year to 4.52%.
The moderation in margins is attributed to significant mobilisation of foreign currency non-resident bank FCNR(B) deposits during the quarter. "This quarter, we mobilised ₹55,000 crore through FCNR deposits," said Ashok Vaswani, managing director of Kotak Mahindra Bank.
"These inflows have supported our objective of increasing the tenor and stability of our deposit franchise by adding longer duration fixed rate funding to the balance sheet," Vaswani added.
The lender raised ₹55,344 crore in FCNR(B) deposits under the Reserve Bank of India's special swap facility, which it plans to deploy over the next few quarters.
Vaswani also said transmission of the central bank's recent repo rate increase into higher loan rates starts in the third quarter and "the pull effect will be felt in Q4."
"We really don't provide margin guidance. Having said that, the repo rate hike takes about three months to feed right through and Q4 will see full impact of that," he said.
The lender's net advances expanded 25% year-on-year to ₹5.77 lakh crore from ₹4.63 lakh crore, while customer assets, including credit substitutes, increased 23% to ₹6.27 lakh crore. Apart from the ₹16,110 crore of FCNR(B)-linked advances extended through international branches, the loan book included ₹8,915 crore of loans transferred from Kotak Mahindra Investments through direct assignment during the quarter.
Institutional banking advances grew 25% to ₹2.87 lakh crore, led by 27% growth in SME lending and 25% growth in corporate banking advances. Retail banking loans increased 22% to ₹2.28 lakh crore, while home loans and loans against property grew 14%.
"Our focused customer segments SME and institutional banking continue to deliver strong growth, reflecting healthy momentum across the business," Vaswani said.
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