Kotak Mahindra Bank Q2 results landed on Saturday, October 24, 2026, and the headline is a solid one. Standalone net profit for the July-September quarter came in at ₹4,212 crore, up 29% from ₹3,253 crore a year ago and 2% higher than ₹4,123 crore in the June quarter. Dig one layer down, though, and the quarter is really about one thing: a huge wave of foreign currency deposits that pushed the balance sheet up and pulled the margin down. All figures below are standalone unless we say otherwise, and they come from the bank’s media release filed with NSE and its board meeting outcome and financial results.
In this article
Kotak Mahindra Bank Q2 results: the key numbers
- Net profit: ₹4,212 crore, up 29% year-on-year and 2% quarter-on-quarter.
- Net interest income (NII): ₹8,459 crore, up 16% from ₹7,311 crore, and up 7% from ₹7,928 crore in Q1.
- Net interest margin (NIM): 4.31%, down from 4.54% a year ago and 4.53% last quarter.
- Fees and services: ₹2,926 crore, up 21% year-on-year.
- Operating profit: ₹6,382 crore, up 21%.
- Provisions: ₹803 crore, down 15% from ₹947 crore a year ago, though higher than ₹668 crore in Q1.
- Net advances: ₹5,77,295 crore, up 25%.
- Period-end deposits: ₹6,51,491 crore, up 23%.
At the group level, consolidated profit was ₹5,645 crore, up 26% from ₹4,468 crore a year earlier.
The FCNR story behind the margin dip
During the quarter, Kotak raised roughly ₹55,344 crore through FCNR(B) deposits, or foreign currency non-resident (bank) deposits, and lent about ₹16,110 crore through its international branches. That inflow explains most of what looks odd in this set of numbers. The bank itself says the fall in NIM was largely due to FCNR(B) mobilisation. Strip those deposits out and total deposits grew 13% rather than 23%. Strip out FCNR-backed loans and the portfolio bought from group company Kotak Mahindra Investments, and loan growth was 19% instead of 25%.
The same effect shows up in the CASA ratio, the share of cheaper current and savings account money. It stood at 38.2% at the end of September, against 42.3% a year earlier. Excluding FCNR(B) deposits, it was 41.8%. So the core franchise hasn’t weakened as much as the headline ratio suggests, but the cost of funds did tick up to 4.52% from 4.46% in the June quarter.
Asset quality kept improving
This is the cleaner part of the report card. Slippages, meaning loans that turned bad during the quarter, fell 24% to ₹1,230 crore from ₹1,629 crore. Gross NPA came down to 1.04% from 1.39% a year ago, and net NPA to 0.24% from 0.32%. Annualised credit cost was 0.35%, against 0.79% in the same quarter last year. Provision coverage stood at 78%.
Costs were also under control. Operating expenses rose 14% to ₹5,271 crore, slower than income growth, and cost to assets improved to 2.40% from 2.67%. Capital adequacy was 21.9%, with a CET1 ratio of 21.4%, which leaves plenty of room to keep growing the book.
What we’d watch next
Profit growth of 29% with falling bad loans is a good quarter by any standard. The question for the next few months is how much of that FCNR money stays, at what cost, and how quickly the bank can deploy it into loans that earn its usual margin. Return on assets for the quarter was 1.92% and return on equity was 11.65%, so profitability ratios have room to improve if NIM recovers.
For a comparison with other lenders this season, see our coverage of IndusInd Bank’s Q2 results and Bank of India’s Q2 numbers. If terms like NIM and slippages are new to you, our guide on how to analyse quarterly results is a good place to start.
Disclaimer: This article is for information and education only and is not investment advice. Please do your own research or consult a SEBI-registered adviser before making investment decisions.
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