Kotak Mahindra Bank reports 7% YoY drop in Q1 FY26 profit.
Kotak Mahindra Bank reported a standalone net profit of ₹3,282 crore for the first quarter of FY26. This is a 7% decrease from ₹3,520 crore during the same time last year. Profits fell even though net interest income (NII) rose by 6% year-on-year to reach ₹7,259 crore. The bank's net interest margin (NIM) stood at a healthy 4.65%.
The decline in profit was mainly because of a large 109% jump in provisions and contingencies, which amounted to ₹1,208 crore for the quarter, as pointed out in the investor presentation. The bank's unadjusted net profit, after including a one-time benefit from the sale of its general insurance business, was much higher at ₹6,250 crore.
Asset quality experienced slight stress. Gross non-performing assets (GNPA) went up to 1.48% from 1.39% during the same period last year, while net NPA (NNPA) was flat at 0.34%. CASA (Current Account Savings Account) ratio dipped to 40.9% from 43.4% in Q1 FY25. Customer assets, however, went up 13% to ₹4.93 lakh crore, and net advances increased by 14% to ₹4.45 lakh crore.
Return on equity (ROE) declined to 10.94% from 13.91%. The cost-to-income ratio remained elevated at 46.19%. The bank was in sound capital position with a capital adequacy ratio (CAR) of 23% and a CET-I ratio of 22.4%, both significantly above regulatory minima.
On a consolidated basis, Kotak Mahindra Group had a net profit of ₹4,472 crore, a 1% increase year-on-year, excluding the gain from sale of Kotak General Insurance in Q1 FY25. Return on equity for the group was 11.13%, whereas return on assets was 2.03%. Total AUM increased 18% year-on-year to ₹7.5 lakh crore.
Of the subsidiaries, Kotak Asset Management Company (AMC) registered an 86% year-on-year rise in profit after tax at ₹326 crore. This was driven by a 24% year-on-year surge in average equity AUM, which reached ₹3.33 lakh crore. Total AUM for the AMC was at ₹5.25 lakh crore, as triggered by robust monthly SIP inflows of ₹1,792 crore in June 2025.
Kotak Mahindra Prime, the group's vehicle and asset financing business, saw 17% PAT growth to ₹272 crore, with customer assets up 16% at ₹41,469 crore. The business had a strong return on assets (ROA) of 2.4% and capital adequacy ratio of 23.5%.
Kotak Securities earned a 16% year-on-year growth in PAT of ₹465 crore and registered a combined market share of 12.8%, with 10.1% in cash and 14.3% in derivatives.
Kotak Mahindra Life Insurance also did better, with PAT growing 88% year on year to ₹327 crore. Gross written premiums for the period were ₹2,861 crore, and AUM grew 14.7% to ₹96,581 crore. The company had a solvency ratio of 2.40x, with 63.1% of individual regular premium from traditional insurance products.
