Kotak Mahindra Bank did very well in the three months ending in March; its net profit (the money left after all expenses) went up 13% compared to the same time last year, reaching Rs 4,026.55 crore, which was better than what analysts predicted. The bank’s basic business continued to do well, with net interest income (the difference between interest earned and interest paid) increasing by 8.1% to Rs 7,876 crore. The board of directors suggested a dividend of Rs 0.65 for each share, though shareholders still need to approve this.
Profit beats estimates as core income grows
The bank’s profit was better than the approximately Rs 3,663 crore that analysts were expecting, and this was helped by the bank’s consistently good day-to-day operations. Operating profit (profit from core business activities) rose 7% from a year ago to Rs 5,855 crore, and it increased 9% compared to the previous three month period.
The bank earned Rs 14,175 crore from interest, a 4.8% increase, and paid Rs 6,299 crore in interest (a small 0.9% increase). However, other income (from things like fees and trading) went down 2.1% to Rs 3,116 crore, as stated in the bank’s report to the stock exchange.
Here are the key numbers at a glance:
– Net profit: Rs 4,026.55 crore, up 13 percent
– NII: Rs 7,876 crore, up 8.1 percent
– Operating profit: Rs 5,855 crore, up 7 percent
– Other income: Rs 3,116 crore, down 2.1 percent
– Street estimate: About Rs 3,663 crore
– Dividend: Rs 0.65 per share
Asset quality strengthens, provisions ease
The quality of the bank’s assets (its loans and investments) improved both in the last three months and compared to the same time last year. Gross Non-Performing Assets (NPAs – bad loans) fell from 1.30% in the last quarter to 1.20%, and from 1.42% a year earlier. Net NPAs (bad loans after considering any money set aside to cover them) went from 0.31% last quarter and a year ago to 0.25%.
The amount of money the bank set aside for potential losses (“provisions”) was reduced to Rs 516.4 crore, down from Rs 809.6 crore in the third quarter of the year and Rs 909.4 crore a year ago, which boosted the final profit. The amount of loans that turned into bad loans during the quarter (“slippages”) fell 32% year-on-year to Rs 1,018 crore, and the percentage of bad loans covered by provisions rose from 78% to 79%.
The bank’s lending continued to grow at a good rate. Total net loans (total loans minus any money the bank has set aside) increased 16% from a year ago to Rs 4,96,009 crore as of March 31, 2026.
Margins soften year on year, funding costs ease
The net interest margin (the difference between the interest the bank makes on loans and what it pays on deposits, expressed as a percentage of the loans) was 4.67% in the fourth quarter of the 2026 fiscal year, which is less than the 4.97% of a year ago, but more than the 4.54% of the third quarter of 2026. For the whole of 2026, the NIM was 4.60%, compared to 4.96% in 2025.
The bank’s funding costs went down. The cost of getting the money it lends out decreased to 4.45% in the fourth quarter of 2026, compared to 5.09% a year before and 4.54% in the third quarter of 2026. For the entire year, the average cost of funding was 4.67%, down from 5.10% in 2025.
The bank’s measures of how profitable it is remained about the same. Return on Assets (how much profit the bank makes for every dollar of assets) was 2.14% (if calculated for a full year) for the fourth quarter of 2026 and 1.97% for the full year of 2026. Return on Equity (how much profit the bank makes for every dollar of shareholders’ investment) was 12.27% (annualised) for the quarter and 11.08% for the year.
Dividend proposed and other developments
Along with the financial results, the board recommended a dividend of Rs 0.65 for each share (shares worth Rs 1) for 2026. The bank will announce when shareholders need to be registered to receive the dividend, when the Annual General Meeting will be held, and when the money will be paid out.
Because of new labor laws, the bank put aside an extra Rs 125.75 crore in 2026 to cover employee costs, based on calculations by actuaries. Also, Kotak Mahindra Capital Company (which the bank owns) sold 30.99% of its ownership in Infina Finance for Rs 1,293.91 crore on March 24, 2026.
This sale of the ownership stake resulted in a profit before tax of Rs 367.79 crore. This profit is being reported as a one-off (“exceptional”) item in the bank’s combined financial statements. After this sale, Infina Finance is no longer considered a part of the Kotak Mahindra Bank group.
On April 30, shares in Kotak Mahindra Bank went up by 0.46% to finish at Rs 383.75 on the National Stock Exchange, before the full details were released.
What to watch next
Investors will want to know when the Annual General Meeting will be, the date for being on the list to get the dividend, and when the dividend will be paid. They will also be watching how the bank’s interest margins and funding costs change, and how the quality of its assets develops in the coming financial year.
