Kotak Mahindra Bank released its financial results for the first quarter of the financial year 2025-26 (Q1 FY26) on July 26, 2025. The bank reported a standalone net profit of ₹3,282 crore, which is 7% lower than the ₹3,520 crore profit it made in the same quarter last year (Q1 FY25).
Why Did the Profit Fall?
The drop in profit was mainly because of a big increase in provisions and reserves kept aside for possible future losses. The bank said its provisions and contingencies went up by 109% to ₹1,208 crore compared to the same period last year.
It is important to note that this ₹3,282 crore profit figure is adjusted and does not include a one-time gain from selling the bank’s general insurance business. If we include that one-time gain, the total profit would have been much higher at around ₹6,250 crore. However, for better understanding of core operations, this one-time amount is excluded from the regular profit count.
Key Financial Highlights
- Net Profit (Adjusted): ₹3,282 crore, down 7% YoY
- Net Profit (Unadjusted with one-time gain): ₹6,250 crore
- Net Interest Income (NII): ₹7,259 crore, up 6% YoY
- Net Interest Margin (NIM): 4.65%, strong performance
- Provisions & Contingencies: ₹1,208 crore, up 109% YoY
- Cost-to-Income Ratio: 46.19%, remains on the higher side
- Return on Equity (ROE): 10.94%, down from 13.91% last year
Asset Quality and Deposits
The bank’s asset quality saw a slight weakening during the quarter. The percentage of gross non-performing assets (GNPA) rose to 1.48%, slightly higher than 1.39% a year ago. However, the net non-performing assets (NNPA) remained steady at 0.34%.
Also Read: Reliance Earns Big in Q1 FY26: Strong Jio, Retail and One-Time Profit Boost Earnings
The CASA ratio, which shows how much of the bank’s deposits come from current and savings accounts, fell to 40.9%, compared to 43.4% in the same quarter last year. This shows that fewer people are keeping their money in these types of low-cost accounts, which could impact the bank’s profit margins in the future.
What This Means
Kotak Mahindra Bank continues to show stable performance in terms of income and margins, but the higher provisioning and slight pressure on asset quality have affected overall profits. While the core business remains strong, with net interest margins at a healthy 4.65%, the rise in bad loans and increased provisioning pulled down profitability.
Also, the fall in CASA ratio points to a change in deposit patterns, possibly as customers look for better interest rates elsewhere. This could increase the bank’s overall cost of funds in the coming quarters.
Outlook Ahead
Despite this dip in quarterly profit, Kotak Mahindra Bank remains one of the well-managed private banks in India. Its strong balance sheet, high capital adequacy, and steady income growth provide a good base for long-term performance.
However, going forward, controlling provisions, improving deposit mix, and managing asset quality will be key focus areas for the bank.
Final Words
Kotak Mahindra Bank’s Q1 FY26 performance shows the challenges banks face in a changing financial environment. While income and margins are stable, rising provisions and deposit shifts have created some pressure.
Investors and customers alike will be watching closely to see how the bank handles these issues in the coming quarters.
Disclaimer: The information in this article is based on Kotak Mahindra Bank’s publicly shared financial reports and investor presentations. Figures are subject to change with future updates. Readers should consider consulting financial experts for investment decisions
