Mumbai: Kotak Mahindra Bank reported a dip in its quarterly profit as higher provisions and margin pressures weighed on earnings, despite steady growth in loans and deposits.
For the quarter ending September 30, 2025, the private sector lender posted a standalone net profit of ₹32.53 billion, slightly lower than ₹33.44 billion recorded a year earlier. The figure fell short of analysts’ expectations of around ₹34.49 billion.
The bank’s provisions for potential bad loans and contingencies rose sharply by about 43 percent to ₹9.47 billion, reflecting a cautious approach amid tightening credit conditions.
Meanwhile, net interest income, a key indicator of lending profitability, grew around 4 percent year-on-year to â‚ą73.11 billion.
Kotak Mahindra Bank’s net interest margin, however, slipped to 4.54 percent from 4.91 percent a year ago, signaling margin compression due to higher deposit costs and competitive lending rates. Despite this, asset quality showed improvement, with gross non-performing assets declining slightly to 1.39 percent from 1.49 percent a year ago.
Deposits and advances both recorded healthy year-on-year growth of around 14 to 16 percent, showing continued business expansion even as profitability tightened.
Financial experts say the increased provisions and narrowing margins reflect broader challenges across India’s banking sector, where institutions are managing higher credit costs and slower growth in unsecured loans.
While Kotak’s balance sheet remains strong, analysts believe short-term earnings could stay under pressure unless margins stabilize and provisions ease.
Looking ahead, investors will watch how the bank manages its credit costs and margins amid changing interest rate conditions. The bank’s improving asset quality and steady growth offer some optimism, but sustaining profitability in a competitive environment remains a key challenge.