Kotak Mahindra Bank has announced its financial results for the quarter ended June 30, 2025 (Q1 FY26), reporting a steep year-on-year decline in profitability. The private sector lender reported a net profit of Rs 3,281.7 crore for the quarter, down 47.5% from Rs 6,250 crore reported in the same quarter last year.
The sharp decline in profit is mainly attributed to a significant increase in provisioning and a drop in treasury income. The bank made provisions worth Rs 1,207.76 crore during the quarter, rising sharply from Rs 909.38 crore in the previous quarter and more than double the Rs 578.48 crore it had set aside in Q1 of last year.
Despite the fall in profit, the bank’s core lending business remained strong. Net interest income (NII) — the difference between interest earned and interest expended — rose 6.1% year-on-year to Rs 7,259.3 crore, compared to Rs 6,842 crore in the same period last year. This shows stability in the bank’s interest-earning operations.
However, the bank's net interest margin (NIM) — a key profitability metric — came under pressure, dropping to 4.65% in Q1 FY26 from 4.97% in the previous quarter. This decline reflects tightening spreads in the lending market.
Asset quality saw a mild deterioration sequentially. Gross non-performing assets (GNPA) rose to 1.48% from 1.42% in the previous quarter. In absolute terms, gross NPAs increased to Rs 6,637.7 crore from Rs 6,134 crore in the March quarter. Net NPAs also edged up to 0.34% from 0.31%, with the absolute figure climbing to Rs 1,531 crore from Rs 1,343.4 crore QoQ.
On a segmental basis, retail banking and corporate/wholesale banking continued to contribute significantly to the bank's revenues and profits. Corporate/wholesale banking revenue stood at Rs 6,207.06 crore, while retail banking brought in Rs 8,650.55 crore during the quarter. The profit before tax (PBT) from retail banking stood at Rs 1,080.20 crore and from corporate banking at Rs 1,878.07 crore.
Total interest earned for the quarter was Rs 13,836.54 crore, up from Rs 12,746.11 crore in the same period last year. The bank’s operating profit (before provisions and contingencies) for Q1 FY26 came in at Rs 5,563.69 crore compared to Rs 5,254.11 crore in Q1 FY25, indicating steady operational performance.
The capital adequacy ratio stood strong at 23%, higher than the 22.41% reported in the previous quarter, and well above regulatory requirements.
Kotak Mahindra Bank’s balance sheet remained robust, with total assets reported at Rs 6,89,008.71 crore. Retail banking assets continued to dominate at Rs 4,52,760.73 crore, reflecting the bank’s strong foothold in the consumer and SME lending segments.
While the results show resilience in core lending, the sharp drop in profit and a slight dip in asset quality indicate that challenges remain. Investors and analysts will be watching future quarters closely to see how the bank manages margin pressures and credit costs in a volatile economic environment.
