Kotak Mahindra Bank’s second-quarter profit rose sharply on stronger fee income and loan growth, though a surge in foreign-currency deposits pushed its net interest margin lower.
Kotak Mahindra Bank reported a sharp rise in second-quarter profit on Friday, helped by stronger non-interest income and steady loan growth, even as margins came under pressure from a jump in foreign-currency deposits. The private lender’s standalone net profit rose 29.5% from a year earlier to ₹4,212 crore for the quarter ended September 30, while profit increased 2.16% from the June quarter, according to the company’s earnings update and reporting by The Hindu BusinessLine. Net interest income climbed 15.7% year on year to ₹8,459 crore, while other income rose 23.4% to ₹3,194 crore.
The bank’s balance sheet continued to expand, with advances up 25% to ₹5.8 lakh crore and deposits rising 23.2% to ₹6.5 lakh crore. Kotak also mobilised ₹55,344 crore in FCNR(B) deposits, a product used by non-resident Indians to place foreign currency funds in India, and deployed ₹16,111 crore through its GIFT City operations. The inflow boosted funding and lending activity, but it also weighed on the net interest margin, which fell to 4.1% from 4.54% a year earlier and from 4.53% in the previous quarter. The bank said asset quality improved, with the gross non-performing asset ratio falling to 0.24% from 0.32% a year ago. Devang Gheewalla, Kotak’s group chief financial officer, said the lender’s “core performance continues to strengthen with volume-led growth, growth in non-interest income, sustained cost discipline and continued improvement in asset quality”.
The pressure from FCNR(B) inflows was visible across the earnings picture, but analysts and company disclosures pointed to a broadly healthy quarter. Business Standard reported that Kotak’s consolidated net profit rose 26% year on year to ₹5,645 crore, supported by higher income and lower provisions, while the moderation in margin was linked to the liquidity flush from those foreign-currency deposits. The bank’s results also fit a wider pattern among private lenders that are still expanding loan books while trying to protect spreads in a competitive deposit market.
Elsewhere in the sector, IDFC First Bank also posted a strong quarter, with net profit tripling to ₹1,044.6 crore as net interest income rose 21% and fee income improved. The bank said it mobilised ₹34,390 crore in FCNR(B) deposits and saw asset quality improve, while its net interest margin eased to 5.58% from 5.90%. AU Small Finance Bank also reported a 53% rise in profit to ₹858 crore, underlining that smaller lenders and private banks alike are benefiting from firm credit demand and better core earnings even as margins face some pressure.
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