Kotak Mahindra Bank Reports Steady Growth in Q3 FY26 Financial Results
Kotak Mahindra Bank has announced its financial performance for the quarter ended December 31, 2025, showcasing a resilient growth trajectory amidst evolving economic conditions. The bank's standalone net profit for the period stood at Rs 3,446 crore, marking a 4.3% increase from Rs 3,305 crore reported in the same quarter of the previous fiscal year. This growth was primarily supported by robust performance in net interest income and other income streams, reflecting the bank's strategic focus on core banking operations.
Consolidated Performance and Income Highlights
On a consolidated basis, the bank's net profit reached Rs 4,924 crore, representing a 5% year-on-year rise from Rs 4,701 crore. The profit before tax for the quarter was recorded at Rs 4,570 crore, compared to Rs 4,387 crore a year earlier, indicating improved operational efficiency. However, the provision for tax saw an increase to Rs 1,124 crore from Rs 1,082 crore, aligning with regulatory requirements and profit growth.
Net interest income, a key indicator of banking profitability, grew by 5% to Rs 7,565 crore from Rs 7,196 crore in the corresponding quarter last year. Other income also demonstrated strong momentum, rising 8% to Rs 2,838 crore from Rs 2,623 crore. This combined growth lifted the net total income to Rs 10,403 crore, up from Rs 9,819 crore, underscoring the bank's diversified revenue streams.
Operational Metrics and Asset Quality
Operating profit for the quarter improved to Rs 5,380 crore from Rs 5,181 crore, driven by income growth. Operating expenditure increased by 8% to Rs 5,023 crore, partly due to higher employee costs, including a one-time incremental expense of Rs 96 crore related to the implementation of the new Labour Code. Provisions and contingencies for the quarter were Rs 810 crore, slightly higher than Rs 794 crore a year earlier, with credit provisions on advances and receivables rising 3% year-on-year to Rs 817 crore.
The bank's asset quality showed signs of improvement, with the gross non-performing assets (NPAs) amounting to Rs 6,320 crore, compared to Rs 6,266 crore in the previous year. The provision coverage ratio remained healthy at 76%, indicating adequate buffers against potential losses. Notably, the gross NPA ratio improved to 1.30% from 1.50% a year earlier and 1.39% in the preceding quarter, reflecting enhanced risk management practices.
Deposits, Advances, and Key Financial Ratios
Outstanding deposits witnessed a significant 15% year-on-year growth to Rs 542,638 crore as of December 31, 2025, from Rs 473,497 crore. Similarly, outstanding advances, net, rose by 16% to Rs 480,673 crore, highlighting strong credit demand and the bank's expanding loan book. Key financial ratios indicated stable performance during the quarter:
- The net interest margin was 4.54%, unchanged from the previous quarter but lower than 4.93% a year earlier.
- Return on assets stood at 1.89%, compared to 2.10% a year ago.
- Return on equity was 10.7% against 11.6% in the same period last year.
- The cost of funds declined to 4.54% from 5.06% a year earlier, aiding profitability.
- The CET1 capital adequacy ratio remained robust at 21.5%, compared with 21.7% a year earlier, ensuring strong capital buffers.
Subsidiary Performance Overview
The performance of Kotak Mahindra Bank's subsidiaries varied during the quarter, showcasing the group's diversified business model:
- Kotak Mahindra AMC and Trustee Company recorded a 31% year-on-year increase in profit to Rs 315 crore, with average assets under management rising 19% to Rs 588,205 crore.
- Kotak Mahindra Prime reported a 15% rise in net profit to Rs 250 crore.
- Kotak Infrastructure Debt Fund posted a 14% increase in profit to Rs 14 crore.
- Kotak Mahindra Investments saw profit decline by 19% to Rs 87 crore.
- Kotak Securities reported a 4% drop in net profit to Rs 431 crore from Rs 448 crore a year earlier.
- Kotak Mahindra Life Insurance recorded a 1% decline in profit to Rs 162 crore.
- BSS Sonata Microcredit reported a loss of Rs 26 crore for the quarter, an improvement from a loss of Rs 50 crore a year earlier.
Overall, Kotak Mahindra Bank's Q3 FY26 results reflect a steady financial performance with growth in key income areas and improved asset quality, positioning the bank well in the competitive banking landscape.
