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Informist, Saturday, Jan. 24, 2026

 

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By Shruti Nair

 

MUMBAI - Provisions for the new labour code weighed down Kotak Mahindra Bank's net profit for the December quarter, despite the bank registering moderate growth in other income. The private sector bank's net profit for Oct-Dec was INR 34.46 billion, up over 4% on year, missing the Street's estimate marginally. Sequentially, the net profit was up nearly 6%.

 

The bank's total income in Oct-Dec was INR 167.41 billion, up over 4% on year. Sequentially, the total income was up over 3%.

 

The lender's operating expenses for the reporting quarter rose nearly 9% on year to INR 50.23 billion. Employee cost increased over 15% on year to INR 22.46 billion. The bank has recognised an incremental provision of INR 955.3 million under employee costs to comply with the government's revised labour code framework.  

 

The lender's interest income was at INR 139.03 billion, up 4% on year. Income from investments fell to INR 26.23 billion, down nearly 4% on year. However, the bank's other income rose to INR 28.38 billion, up over 8% on year. The bank's net interest income – the difference between interest earned and expended – for the December quarter was INR 75.65 billion, up 3% sequentially and 5% on year, and marginally higher than analysts' estimate of INR 75.53 billion.

 

The lender's total expenses during the reporting quarter rose nearly 4% on year to INR 113.61 billion. Of this, interest expenses was INR 63.39 billion, up around 2% on year. Sequentially, interest expenses were nearly flat.

 

The lender's asset quality improved, with the gross non-performing asset ratio falling to 1.30% as on Dec. 31 from 1.39% as on Sept. 30. The net non-performing asset ratio was 0.31% as on Dec. 31, nearly flat on quarter and down from 0.41% at the end of December 2024.

 

The bank's slippages were at INR 16.05 billion, down from INR 16.57 billion in the year-ago quarter. Provisions for the reporting quarter were INR 8.10 billion, up 2% from the year-ago quarter. However, sequentially, the bank's provisions fell almost 15%.

 

Growth in net advances was robust but growth in the private sector bank's bottom line was only moderate. The bank's net advances grew 16% on year to INR 4.81 trillion on Dec. 31. The Mumbai-based bank's total deposits were up 15% on year at INR 5.43 trillion at the end of the quarter.

 

Current account deposits rose 14% on year to INR 755.60 billion in the quarter. However, the current account savings account ratio fell to 41.3% on Dec. 31 from 42.3% a year ago. The bank's cost of funds fell to 4.54% from 5.06% a year ago. The cost of funds was 4.70% a quarter ago.

 

The lender's net interest margin contracted to 4.54% on year from 4.93% in the year-ago quarter, primarily due to the Reserve Bank of India cutting its key repo rate by 125 basis points in 2025. Sequentially, the net interest margin was flat. The bank's Basel-III capital adequacy ratio was 22.63%.

 

For Apr-Dec, the bank's net profit was INR 99.81 billion, down nearly 23% on year. The bottom line for the previous nine months was boosted by a net gain of INR 35.20 billion from the divestment of 70% stake in its subsidiary Kotak Mahindra General Insurance Co. Ltd. Total revenue for Apr-Dec was INR 498.96 billion, up nearly 5% on year. The bank did a 5-for-1 stock split on Jan. 14 and the face value of the shares is now INR 1 each. On Friday, shares of Kotak Mahindra Bank ended at INR 422.80 nearly 1% lower on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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