Kotak Mah. Bank

Kotak Mahindra Bank reported a strong Q3 FY26, with net advances growing 16% Y-o-Y and average deposits increasing 15% Y-o-Y, maintaining a healthy CASA ratio of 41.3%. The bank's standalone PAT stood at INR 3,400 crores, growing 8% Q-o-Q (adjusted for one-off^📎 labor code provisions), while consolidated PAT reached INR 4,900 crores, up 10% Y-o-Y. This growth was supported by consistent quarterly advances growth of approximately 4% over the last three quarters and a healthy Net Interest Margin (NIM) of 4.54%, which would have been 4.58% excluding short-term treasury deployments.

Asset quality parameters showed significant improvement, with Gross NPA reducing to 1.30% from 1.39% in Q2, and Net NPA improving to 0.31% from 0.32%. The provision coverage ratio remained strong at 76%. Credit costs saw a substantial reduction to 63 basis points in Q3, down from 79 bps in Q2 and 93 bps in Q1, primarily driven by improving delinquencies in unsecured retail businesses. Management expects this normalization trend to continue, with credit costs gradually declining further in Q4 and Q1 FY27, though at a more moderated pace.

The bank's deposit franchise demonstrated robust growth, with average current account balances growing 14% Y-o-Y and average fixed rate savings balances growing 12% Y-o-Y. The focus on granular CASA growth, including the 811 offering and self-employed segments, contributed to this performance. The cost of funds reduced by 16 bps in Q3 to 4.54%, continuing a downward trajectory from 5.01% in Q1 and 4.70% in Q2. Management anticipates the repricing of term deposits to be largely complete by Q1 of the next financial year, contributing to further cost of fund benefits.

The consumer asset portfolio grew 16% Y-o-Y and 4% sequentially, led by strong momentum in MSME. Mortgage loans, including home loans and loan against property, registered healthy growth of 18% Y-o-Y and 5% Q-o-Q. While the acquired Personal Loan portfolio from Standard Chartered is running down quicker than expected, the organic personal loan business continues to be a main driver. The bank has revamped its credit card proposition, with the Solitaire card gaining traction in the High Net Worth segment, and plans to ramp up acquisition cautiously to ensure quality growth.

The Commercial Bank saw the CV industry sales grow 22% Y-o-Y and 21% Q-o-Q, though the bank remains cautious on the Retail CV segment due to ongoing stress. The Agri SME book grew 12% Y-o-Y and 8% Q-o-Q, driven by a pivoted strategy around Agri-clusters. Wholesale Banking Assets, including Credit Substitutes, grew 17% Y-o-Y and 3% Q-o-Q, with Corporate SME advances growing 26% Y-o-Y and 7% Q-o-Q. Investment Banking had a strong quarter, managing 11 IPOs and 3 QIPs, raising INR 74,000 crores, and advising on 5 transactions worth INR 26,000 crores.

Subsidiaries played a significant role, contributing 30% of consolidated profits, with a Y-o-Y growth of 11% and sequential growth of 19%. Kotak Mahindra Prime (auto finance) delivered 15% Y-o-Y PAT growth, with customer assets growing 13% to INR 43,244 crores. Kotak AMC and Trustee companies saw AUM growth of 31% Y-o-Y, and the life insurance business reported 18.7% Y-o-Y growth in individual annual premium equivalent. The group emphasizes its comprehensive financial conglomerate model, leveraging cross-sell opportunities and maintaining strong capital adequacy at 23.3%.