Kotak Mahindra Bank Q2 FY26 Results: Net Profit Falls 3% Despite Strong Loan Growth
Kotak Mahindra Bank reported a 3% YoY drop in net profit for Q2 FY26 to ₹3,253 crore, even as net interest income grew 4% and loan book expanded 16% amid higher provisions.
Kotak Bank’s PAT Down 3% in Q2: Provisions Rise Despite Strong Growth
Kotak Mahindra Bank, one of India’s leading private sector lenders, announced its financial results for the second quarter of fiscal year 2026 with a mixed performance.
The bank’s profit after tax (PAT) declined 3% year-on-year, primarily due to a sharp rise in provisions, even though its core operations and loan growth remained strong.ndtvprofit+1
Key Financial Highlights
For Q2 FY26, Kotak Mahindra Bank reported a standalone net profit of ₹3,253 crore, down from ₹3,344 crore in the same quarter last year.
Kotak Mahindra Bank Q2 FY26 Results:
The decline of around 3% was driven largely by higher provisioning expenses, which increased 43.5% year-on-year to ₹947 crore.economictimes+1
Meanwhile, the bank’s net interest income (NII)—a key measure of profitability—rose 4% to ₹7,311 crore from ₹7,020 crore a year earlier.
Operating profit also saw a modest improvement of 3%, reaching ₹5,268 crore compared with ₹5,099 crore previously.scanx+1
Robust Loan and Deposit Growth
Despite the slight decline in profit, Kotak Bank’s balance sheet continued to display solid growth. Net advances rose 16% year-on-year to ₹4.63 lakh crore, while total deposits grew 14% to ₹5.28 lakh crore. The Current Account Savings Account (CASA) ratio stood at 42.3% as of September 2025, up from 40.9% in the previous quarter, showing improvement in low-cost deposit mobilization.ndtvprofit+1
Asset Quality Improvement
In positive news, the bank’s asset quality improved quarter-on-quarter.
Gross Non-Performing Assets (GNPA) dipped to 1.39% from 1.48%, while Net Non-Performing Assets (NNPA) improved to 0.32% from 0.34%. This indicates careful credit risk management even in a rising interest rate environment.economictimes+1
Additionally, the Provision Coverage Ratio stood at a healthy 77%, and the Capital Adequacy Ratio (CAR) under Basel III norms remained robust at 22.1%, supporting a strong capital base.
Business Segment Performance
Across segments, Kotak’s corporate and retail businesses showed mixed trends:
The home loan and loan against property segment grew 18% year-on-year to ₹1.38 lakh crore.
Corporate banking loans climbed 18% to ₹1.09 lakh crore.
Business banking assets rose 20% to ₹47,825 crore.
On the downside, credit card loans declined 14% YoY to ₹12,444 crore, and retail microcredit dipped 41% to ₹5,725 crore, reflecting tighter credit risk policies.ndtvprofit
Rising Provisions and Slippages
The bank’s increased provisions were largely attributed to sectoral exposures and conservative provisioning norms amid uncertain macroeconomic conditions.
Fresh slippages for Q2 FY26 stood at ₹1,629 crore, down from ₹1,812 crore in the previous quarter, while recoveries and upgrades rose 25% quarter-on-quarter to ₹688 crore.scanx+1
Profitability and Margins
At the same time, the Net Interest Margin (NIM) saw a mild contraction to 4.54% from 4.65% in the previous quarter, signaling some pressure from rising funding costs and competition in the retail loan space. Cost of funds for the quarter stood at 4.70%, as per filing data.ndtvprofit+1
Market Reaction and Outlook
Market analysts noted that while the bank’s operational performance remained resilient, the rise in provisions weighed on overall profitability. However, the improved balance sheet strength, stable asset quality, and strong capital ratios reflect stability and room for sustained growth ahead.scanx+1
Shares of Kotak Mahindra Bank on the NSE traded around ₹2,187 post-results, slipping around 1.7% following the announcement
reflecting investor caution amid rising provisioning concerns.perplexity
Conclusion
In summary, Kotak Mahindra Bank delivered steady operational metrics in Q2 FY26 with healthy loan and deposit growth but faced headwinds from higher provisioning. The bank’s steady NII and improved asset quality underscore its resilience, though the moderation in PAT highlights near-term profitability challenges.
With a robust capital structure and improving CASA mix, Kotak Bank appears well-positioned for long-term growth even as it navigates short-term pressures.
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