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    Kotak Mahindra Bank Limited

    KOTAKBANK
    Financial Services·2 May 2026
    Management Summary

    Kotak Mahindra Bank delivered a strong Q4 FY26 with robust standalone PAT growth of 13% and significant improvement in credit costs. The bank maintained healthy advances and deposit growth, supported by a resilient CASA ratio and strong asset quality metrics. While facing macroeconomic headwinds and MTM impacts on capital market businesses, management emphasized a focus on calibrated growth, digital transformation, and continued cost efficiencies, anticipating a gradual NIM reduction in FY27.

    Highlights

    8

    • Standalone PAT for Q4 FY26 increased by 13% YoY.

    • Consolidated PAT for Q4 FY26 grew 6% QoQ to INR 5,238 crore (excluding exceptional gain).

    • Credit cost improved significantly to 39 basis points in Q4 FY26, down from 63 bps in Q3 FY26.

    • Net advances grew 16% YoY, with SME and mortgage businesses growing over 18% YoY.

    • Total deposits grew 15% YoY, driven by strong traction in low-cost granular deposits.

    • CASA ratio stood at a resilient 43.3% as of March 31, 2026.

    • Book value per share grew 15% YoY to INR 182.

    • Gross NPA improved to 1.2% from 1.3% in December, and Net NPA to 0.25% from 0.31%.

    Concerns

    5

    • Year-end volatility in equity and bond markets had an MTM impact across the group.

    • Muted activity in investment banking and continued FPI selling affected institutional equities and custody businesses.

    • NIM is expected to reduce next year, though the rate of reduction will be much lesser and more gradual than the current year.

    • Potential impact of a projected lower-than-normal monsoon cycle this year.

    • Construction equipment industry declined 18% YoY in Q4 and 8% for FY26 due to various headwinds.

    Key financials

    Metrics

    12

    Periods

    3

    Headline

    7
    • Net Advances Growth
      16%
    • Total Deposit Growth
      15%
    • Gross NPA
      1.2%
      QoQ-7.7%
    • Net NPA
      25%
      QoQ-19.4%
    • CASA Ratio
      43.3%

    Q4

    4
    • NIM
      4.7%
      QoQ+2.9%
    • Credit Cost
      39 bps
      QoQ-38.1%
    • Standalone PAT Growth
      13%
    • Consolidated PAT
      ₹5,238 Cr
      QoQ+6.4%

    FY26

    1
    • Cost to Assets
      2.8%

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Dividend

    ₹0.65/share (final)

    Payout ratio 4.6%

    M&A

    Infina Finance Limited

    divestment · closed

    Liquidity

    Liquidity disclosed

    Standalone LCR is normally between 120% and 125%. Group LCR at year-end is around 135%.

    Guidance & targets

    6
    CategoryTargetPriority
    Advances
    Net Advances Growth
    1.5x to 2x nominal GDP growth
    		High
    Profitability
    ROE
    high teens
    		Medium
    NIM
    NIM Trajectory
    reducing next year, much lesser and more gradual
    		Medium
    Gold Loan
    Gold Loan Scale Up
    scale up over the next 18 to 24 months
    		Medium
    Microfinance
    Microfinance Industry Recovery
    gradual recovery expected
    		Medium
    Cost
    Cost to Asset Ratio
    going down
    		Medium

    NIM Trajectory

    FY27
    Current4.67% (Q4 FY26)
    TargetGradual and lesser reduction than FY26

    Why it matters

    NIM is a key profitability driver, and its trajectory will indicate the bank's ability to manage funding costs and asset yields.

    So, we expect NIM will be reducing next year, but the rate of reduction will be much lesser and far more gradual, as I explained, based on the tenure profile of the TD.

    How to verify

    key_financials.metrics[label='NIM (Q4)']

    Risks & concerns

    5
    RiskSeverity

    Macroeconomic and Geopolitical Headwinds

    West Asia crisis, Strait of Hormuz, increased oil and gas prices, rupee pressure, FPI outflows, and year-end market volatility impacting MTM. — Management acknowledged

    medium

    Potential Lower-Than-Normal Monsoon Cycle

    IMD's below normal monsoon forecast for FY27 due to El Nino adds uncertainties, potentially impacting rural income and related credit portfolios. — Management acknowledged

    medium

    Slower Growth in Corporate Banking Book

    QoQ advances were impacted by slower growth in the corporate banking book, attributed to strategic decisions not to roll over less profitable short-term lending in March. — Management acknowledged

    low

    Muted Credit Card Business Growth

    Overall fee income growth was impacted by muted credit card business growth, which was relatively flat sequentially. — Management acknowledged

    low

    Construction Equipment Industry Downturn

    Industry declined 18% YoY in Q4 and 8% for FY26 due to slower infrastructure execution, tight state finances, and geopolitical disruptions. — Management acknowledged

    medium

    Q&A highlights

    8

    “So, if you have seen the TD rates, which we are increasing, are for the longer duration. So, the effect of the increase in the TD rate in the cost of fund and then impacting NIM will be gradual and If I look at it, in the current year, the NIM drop was close to 36 bps. So, we expect NIM will be reducing next year, but the rate of reduction will be much lesser and far more gradual...”

    Analyst questioned the future NIM trajectory given the bank's higher TD rates, and management clarified that the impact would be gradual and less severe than the previous year due to longer duration TDs and offsetting CASA growth.

    asked by Kunal Shah

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q4 Performance Driven by Credit Cost Improvement

    Kotak Mahindra Bank reported a robust Q4 FY26 with standalone Profit After Tax (PAT) growing 13% year-on-year. This performance was significantly bolstered by an improved credit cost, which reduced to 39 basis points in Q4 from 63 basis points in Q3. The bank also saw its consolidated PAT increase by 6% quarter-on-quarter to INR 5,238 crore, excluding an exceptional gain📎 from divestment.

    02

    Healthy Advances and Deposit Growth with Resilient CASA

    The bank demonstrated strong balance sheet growth, with net advances increasing 16% year-on-year and total deposits growing 15% year-on-year. This growth was supported by strong traction in low-cost granular deposits, leading to a resilient CASA ratio of 43.3% as of March 31, 2026. SME and mortgage businesses were key drivers, both growing over 18% year-on-year.

    03

    Asset Quality Improvement and Unsecured Portfolio Management

    Asset quality parameters showed improvement across the board in Q4, with Gross NPA reducing to 1.2% from 1.3% in December, and Net NPA improving to 0.25% from 0.31%. Slippages also significantly decreased to INR 1,018 crore from INR 1,605 crore in Q3. Management highlighted that the stress observed in the credit cost line during the first three quarters of the year is effectively behind them, particularly in unsecured portfolios.

    04

    Strategic Approach to Corporate Lending and NIM Outlook

    While corporate advances grew 22% year-on-year, the book remained flat sequentially in Q4. Management clarified this was a deliberate decision in March due to high short-term interest rates, opting not to roll over less profitable short-term lending. For NIM, a gradual reduction is expected in FY27, but it will be less severe than the 36 bps drop seen in FY26, partially offset by CASA growth and unsecured portfolio buildup.

    05

    Focus on Digital Transformation and Cost Efficiencies

    The bank continues to prioritize automation and digitization, which contributed to a 27 basis points improvement in the cost to total assets ratio for FY26, bringing it to 2.75%. Management expects further cost efficiencies in the coming year, especially with the technology embargo behind them, which will contribute to improving Return on Assets (ROA).

    06

    Macroeconomic Headwinds and Watchful Stance

    Management acknowledged ongoing macroeconomic and geopolitical headwinds🌐, including the West Asia crisis, rising oil and gas prices, and FPI outflows, which impacted capital market businesses. A watchful stance is being maintained, particularly regarding the potential impact of a projected lower-than-normal monsoon cycle on rural income and related credit portfolios for FY27.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.