Kotak Mahindra Bank Q2 profit up 29%, net interest margin falls to 4.31%

what happened

According to Moody's, Kotak Mahindra Bank's standalone net profit for the September quarter of FY27 climbed 29% year on year, to Rs 4,212 crore. Consolidated profit rose 26%, to Rs 5,645 crore. Higher interest income and lower provisions supported the result.

The net interest margin (NIM), however, dropped to 4.31% from 4.54% a year earlier and 4.53% in the previous quarter. The bank mobilised about Rs 55,344 crore through FCNR(B) deposits, which are foreign currency accounts held by non-resident Indians, and lent roughly Rs 16,110 crore through its international branches. Net interest income grew 16%, to Rs 8,459 crore.

Asset quality improved. Gross non-performing assets fell to 1.04% of advances from 1.39%, while the CASA ratio declined to 38.2% from 42.3%.

why it matters

Two signals matter for markets: profit is growing faster than the bank's core lending income, and the pressure on margins comes from the FCNR(B) deposit push. Deposit growth excluding FCNR(B) was 13%, pointing to a more moderate inflow of funds. Investors will watch how margins develop in the coming quarters.

market impact

Indian banks: strong profit supports the sector, but margin compression limits earnings growth

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