Kotak Mahindra Bank Q1 FY26 Results: Snapshot

Kotak Mahindra Bank Q1FY26 Performance Snapshot

Introduction

Kotak Mahindra Bank Q1 results was announced on 26-July-2025.

Given that, I thought it would be insightful to dive deep into Kotak Mahindra Bank’s performance for the first quarter of Financial Year 2026 (Q1FY26). I’ve also written about Q1 updates of HDFC Bank and Axis Bank. You can check the links for details.

What do these numbers tell us about one of India’s leading financial powerhouses?

Let’s get into the details.

Kotak Mahindra Bank: The Consolidated Picture for Q1FY26

When we look at the entire Kotak Mahindra Group’ Q1FY26 numbers, ending June 30, 2025, paint an interesting picture.

The Consolidated Profit After Tax (PAT) stood at Rs.4,472 crore. That’s a 1% increase year-on-year (YoY) from Rs.4,435 crore in Q1FY25, if we exclude the gain from the KGI divestment in the previous year.

This shows a steady, albeit modest, growth in overall profitability.

The Group’s Assets Under Management (AUM) witnessed a healthy growth, reaching Rs.750,143 crore as of June 30, 2025. This is an impressive 18% jump compared to Rs.636,311 crore on June 30, 2024.

This significant increase in AUM suggests that more and more people are entrusting their investments with Kotak.

Specifically, the Domestic MF Equity AUM grew by 22% YoY to Rs.357,323 crore.

Furthermore, the consolidated net worth was Rs.164,903 crore as of June 30, 2025.

The Book Value per Share also increased to Rs.829, marking a 17% rise year-on-year from Rs.710.

These figures reflect a strengthening financial position of the Group.

When it comes to efficiency and profitability ratios, following are the numbers:

• Return on Assets (ROA) for Q1FY26 (annualized) was 2.03%,
• While the Return on Equity (ROE) was 11.13%.

These ratios give us a quick glance at how effectively the company is using its assets and shareholder investments to generate profits.

From a capital strength perspective, following are the numbers:

• Consolidated Capital Adequacy Ratio (CAR) as per Basel III stood at 23.7%. A CET I ratio of 22.7% as of June 30, 2025. A robust CAR indicates the bank’s ability to absorb potential losses.
• The Average Liquidity Coverage Ratio (LCR) for Q1FY26 was also strong at 138%.

Decoding the Bank’s Standalone Performance

Now, let’s zoom in on Kotak Mahindra Bank’s standalone performance.

The Bank’s Net Advances increased by 14% year-on-year to Rs.444,823 crore as of June 30, 2025. This growth in advances shows a healthy appetite for lending.

The average advances (including IBPC & BRDS) for Q1FY26 also grew by 14% YoY. It’s worth noting that unsecured retail advances (including retail microcredit) accounted for 9.7% of net advances as of June 30, 2025.

On the liabilities front, Average Total Deposits grew by 13% year-on-year to Rs.491,998 crore for Q1FY26. This is a crucial metric for any bank, indicating its ability to attract and retain customer funds.

We saw varying growth rates within deposits:

• Average Current Deposits grew by 9% YoY to Rs.67,809 crore.
• Average Savings Deposits increased by 2% YoY to Rs.124,186 crore.
• Average Term Deposits showed a robust 19% YoY growth, reaching Rs.300,003 crore.

The CASA (Current Account Savings Account) ratio as of June 30, 2025, was 40.9%. While this is a slight dip from 43.4% on June 30, 2024, a strong CASA ratio generally indicates a lower cost of funds for the bank, which was 5.01% in Q1FY26.

The Credit to Deposit ratio stood at 86.7%.

The bank now serves 5.4 crore customers, up from 5.1 crore a year ago. This customer growth is a positive sign.

From a profitability standpoint, following are the numbers:

• The Net Interest Income (NII) for Q1FY26 increased to Rs.7,259 crore, a 6% rise YoY.
• The Net Interest Margin (NIM) was 4.65% for the quarter.
• Fees and services contributed Rs.2,249 crore to the income.
• The bank’s operating profit for Q1FY26 grew by 6% YoY to Rs.5,564 crore.
• The standalone PAT for the bank was Rs.3,282 crore.

Now, let’s talk about asset quality. It is a critical indicator of a bank’s health. In this quarter, most Indian banks have increased their provisions as asset quality has deteriorated. Let’s see what is the case with Kotak.

• The Gross Non-Performing Assets (GNPA) stood at 1.48%. The Net Non-Performing Assets (NNPA) was 0.34% as of June 30, 2025. It’s good to see the NNPA remain low and even slightly improve from 0.35% a year prior.
• The Provision Coverage Ratio (PCR) stood strong at 77%. This indicates a good buffer against potential loan losses.

Areas of Concern in Q1FY26 Results

While the overall picture for Kotak Mahindra Group shows growth, some details from the Q1FY26 performance do stand out and are worth discussing:

• Bank’s Standalone Profit After Tax (PAT) Declined: This is quite significant. The Bank’s standalone PAT for Q1FY26 stood at Rs.3,282 crore. This represents a 7% decrease YOY when compared to Rs.3,520 crore in Q1FY25, after excluding the gain from KGI divestment. While the consolidated PAT saw a slight increase, the core banking business’s profitability took a hit.
• Net Interest Margin (NIM) Contraction: The bank’s NIM decreased to 4.65% in Q1FY26. This is a drop from 5.02% in Q1FY25. A lower NIM typically means the bank is earning less from its core lending activities relative to its interest-bearing liabilities.
• CASA Ratio Dip: The CASA ratio for the bank was 40.9% as of June 30, 2025. This is a decline from 43.4% as of June 30, 2024. A lower CASA ratio can increase a bank’s cost of funds over time, even if the current cost of funds is 5.01%.
• Increase in Provisions and Contingencies: The bank saw a substantial increase in provisions (other than tax) and contingencies. For Q1FY26, these provisions were Rs.1,207.76 crore for the standalone bank, showing a 109% increase YoY from Rs.578.48 crore in Q1FY25. This higher provisioning suggests the bank is setting aside more money for potential loan losses, which impacts net profit.
• Deterioration in Gross Non-Performing Assets (GNPA): While the Net NPA (NNPA) slightly improved, the GNPA percentage for the bank increased to 1.48% in Q1FY26 from 1.39% in Q1FY25. An increase in gross NPAs indicates a rise in the proportion of bad loans before considering provisions.
• Rise in Fresh Slippages: The bank’s fresh slippages increased to Rs.1,812 crore in Q1FY26, up from Rs.1,358 crore in Q1FY25. This means a higher volume of new loans turned bad during the quarter.
• Increase in SMA-2 Accounts: Loans classified under SMA-2 (Special Mention Account – 2), which are loans where principal or interest is overdue for 61-90 days, increased significantly to Rs.340 crore as of June 30, 2025, from Rs.116 crore as of March 31, 2025. This indicates a rise in early warning signs of potential future NPAs.

• Declines in Specific Retail Segments:

• Credit Cards advances decreased by 12% YoY to Rs.12,924 crore from Rs.14,644 crore.
• Retail Microcredit saw a significant decline of 43% YoY to Rs.5,882 crore from Rs.10,368 crore.
• Performance of Some Subsidiaries: While overall subsidiaries performed well, Kotak Mahindra Investments saw its PAT decrease by 22% YoY. International Subsidiaries also experienced a 40% decline in PAT YoY.

These points indicate some underlying pressures or shifts within the bank’s operations.

The decline in standalone PAT, combined with a dip in NIM and an increase in fresh slippages and provisions, suggests that while the overall group remains stable, the core banking business faces certain challenges.

About The Subsidiaries

Kotak’s subsidiaries also played a significant role in the Group’s overall performance.

• Kotak AMC and TC (Asset Management Company & Trustee Company) saw its PAT rise by a remarkable 86% YoY. Their Equity QAAUM also increased by 24% YoY.
• Kotak Mahindra Prime, which focuses on vehicle financing, reported a 17% increase in PAT. Their advances also grew by 16% YoY.
• Kotak Mahindra Life Insurance‘s PAT surged by 88% YoY, demonstrating strong growth in the insurance segment.
• Kotak Securities, the broking arm, saw its PAT up by 16% YoY.
• Kotak Mahindra Capital Company (Investment Banking) saw its PAT grow by 10%.
• Kotak Alternate Asset Managers experienced significant growth in PAT.

These individual successes across diverse financial services truly highlight the “One Kotak” strategy at play.

Conclusion

Kotak Mahindra Group’s Q1FY26 results is nuanced. It has both the shades of positives and negatives.

While consolidated PAT saw a slight increase and Group AUM demonstrated strong growth, the standalone bank faced profitability challenges.

This dual performance highlights areas for close monitoring within the core banking operations.

Here’s a comparison of key positive and negative points from the Q1FY26 results:

Positive Highlights (Q1FY26)	Negative Highlights (Q1FY26)
Consolidated PAT up 1% YoY to Rs.4,472 crore (excl. KGI divestment gain).	Bank’s Standalone PAT down 7% YoY to Rs.3,282 crore (excl. KGI divestment gain).
Group AUM grew 18% YoY to Rs.750,143 crore.	Net Interest Margin (NIM) contracted to 4.65% from 5.02% in Q1FY25.
Book value per share increased 17% YoY to Rs.829.	CASA Ratio dipped to 40.9% from 43.4% as of June 30, 2024.
Consolidated Customer Assets grew 13% YoY to Rs.557,369 crore.	Provisions and Contingencies (standalone) increased 109% YoY to Rs.1,207.76 crore.
Net Advances increased 14% YoY to Rs.444,823 crore.	Gross NPA (GNPA) percentage increased to 1.48% from 1.39% in Q1FY25.
Average Total Deposits grew 13% YoY to Rs.491,998 crore.	Fresh Slippages increased to Rs.1,812 crore from Rs.1,358 crore in Q1FY25.
Operating profit for the Bank increased 6% YoY to Rs.5,564 crore.	SMA-2 accounts increased significantly to Rs.340 crore from Rs.116 crore.
Kotak AMC and TC PAT up 86% YoY.	Credit Card advances decreased 12% YoY to Rs.12,924 crore.
Kotak Mahindra Prime PAT up 17% YoY.	Retail Microcredit declined significantly by 43% YoY to Rs.5,882 crore.
Kotak Mahindra Life Insurance PAT up 88% YoY.	Kotak Mahindra Investments PAT decreased 22% YoY.

While the Kotak Group’s diversified entities show strength, the core banking business faces headwinds in profitability and asset quality.

These trends necessitate close observation in upcoming quarters.

Have a happy investing.