Kotak Mahindra Bank Q2 Profit Rises 29% to ₹4,212 Crore as FCNR Deposit Inflows Trim Margin

Kotak Mahindra Bank's standalone Q2 FY27 profit rose 29% to ₹4,212 crore, ahead of estimates, while ₹55,344 crore of FCNR(B) deposit inflows pulled its net interest margin to 4.31%.

Oct 25, 2026 - 07:15

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Kotak Mahindra Bank reported on Saturday, October 24, 2026, that standalone profit after tax for the second quarter of fiscal 2027 rose 29% from a year earlier to â‚¹4,212 crore, according to the media release the bank filed with the stock exchanges. The result came ahead of analyst expectations, while a large inflow of foreign-currency deposits during the July-September quarter pushed down the lender's net interest margin.

Headline numbers

Standalone profit for the quarter ended September 30 compared with â‚¹3,253 crore in the same quarter a year earlier and was up 2% from â‚¹4,123 crore in the first quarter of fiscal 2027, the bank said. Consolidated profit after tax, which includes its securities, asset management, life insurance and other subsidiaries, rose 26% year on year to â‚¹5,645 crore from â‚¹4,468 crore and was 3% higher than the previous quarter's â‚¹5,480 crore.

Analysts had expected standalone profit of 41.04 billion rupees, according to LSEG data cited by Reuters, compared with the reported 42.11 billion rupees, or about $443.5 million.

Net interest income rose 16% to â‚¹8,459 crore from â‚¹7,311 crore a year earlier and was up 7% sequentially. Fees and services income increased 21% to â‚¹2,926 crore, operating expenses rose 14% to â‚¹5,271 crore, and operating profit grew 21% to â‚¹6,382 crore.

FCNR deposits and the margin

During the quarter, the bank mobilised about â‚¹55,344 crore of FCNR(B), or foreign currency non-resident (bank), deposits and provided about â‚¹16,110 crore of loans through its international branches, the filing said. Net interest margin was 4.31%, compared with 4.54% a year earlier and 4.53% in the first quarter; the bank attributed the moderation "largely" to FCNR(B) mobilisation. Its cost of funds was 4.52%, against 4.70% a year earlier and 4.46% in the prior quarter.

Reuters noted that the Reserve Bank of India introduced measures in June, including concessional hedging facilities and swap arrangements, to attract foreign currency deposits, and that lending against such deposits contributed to loan growth at Indian banks during the quarter.

Period-end deposits rose 23% to â‚¹651,491 crore; excluding FCNR(B) deposits, growth was 13%. The current and savings account (CASA) ratio fell to 38.2% at September 30 from 42.3% a year earlier, which the bank said reflected the larger term-deposit base from FCNR inflows. Excluding those deposits, the CASA ratio was 41.8%.

Loans and asset quality

Net advances grew 25% to â‚¹577,295 crore from â‚¹462,688 crore. Excluding loans against FCNR(B) deposits and a loan portfolio acquired from Kotak Mahindra Investments Ltd, advances grew 19%, according to the release. The credit-to-deposit ratio was 88.6%.

Provisions fell 15% to â‚¹803 crore from â‚¹947 crore a year earlier, and annualised credit cost was 0.35%, compared with 0.79% a year earlier. Slippages declined 24% to â‚¹1,230 crore. Gross non-performing assets were 1.04% of loans and net NPAs were 0.24%, against 1.39% and 0.32% a year earlier, with a provision coverage ratio of 78%.

The bank's standalone capital adequacy ratio under Basel III was 21.9%, with a CET1 ratio of 21.4%. Annualised standalone return on assets was 1.92% and return on equity was 11.65%.

Subsidiaries

Among subsidiaries, Kotak Securities earned â‚¹348 crore in the quarter, compared with â‚¹345 crore a year earlier, and Kotak Mahindra Life Insurance earned â‚¹198 crore, compared with â‚¹49 crore, the filing showed. Consolidated customer assets grew 21% to â‚¹699,250 crore, and consolidated customer assets under management rose 8% to â‚¹814,118 crore. Book value per share rose 16% to â‚¹196.

Share price and market backdrop

The results were announced on a Saturday, after the last trading session. Kotak Mahindra Bank shares closed 1.49% lower at â‚¹430.50 on the NSE on Friday, October 23, and were down 2.94% for the year to date, The Economic Times reported, citing NSE data. The stock will trade on the results for the first time in the next session.

The broader market ended a holiday-shortened week lower. The Nifty 50 fell in all four sessions and closed Friday at 22,600, down 2.4% for the week, while the Nifty Midcap 100 and Nifty Smallcap 100 fell 5.6% and 7.3%, The Economic Times reported.