Kotak Mahindra Bank posts 26% profit gain

Kotak Mahindra Bank said group after-tax profit increased 26% from a year earlier to 5,645 crore rupees in Q2 FY27, according to an Investing Australia earnings-call transcript published Oct. 24.

For Kotak Mahindra Bank, the Oct. 24 transcript also showed net interest margin fell to 4.31% from 4.53% in Q1 FY27, putting the profit gain against a clear funding-cost trade-off.

Standalone bank profit rose 29% from a year earlier to 4,212 crore rupees. One crore equals 10 million, the Indian numbering unit commonly used in company reporting.

Ashok Vaswani, managing director and chief executive, said on the call: “We are seeing encouraging traction across our focus customer segments, independent product businesses, while our investments in technology are clearly paying off.”

The bank said net advances grew 25% year on year and deposits increased 23%. Its balance sheet expanded 25% to about 9 lakh crore rupees, another Indian reporting unit equal to 100,000.

Asset-quality measures improved from the prior quarter. Gross non-performing assets declined to 1.04% from 1.18% in Q1 FY27, while net non-performing assets fell to 0.24% from 0.27%. Credit cost, the cost of expected loan losses as a share of loans, eased to 35 basis points from 46 basis points.

The transcript said the bank raised $5.78 billion, or about 55,000 crore rupees, through its FCNR program. FCNR refers to Foreign Currency Non-Resident deposits, a foreign-currency deposit product for non-resident Indians.

Vaswani described the FCNR program as a non-recurring opportunity. “We have raised $5.78 billion, or INR 55,000 crores through the program, significantly ahead of what our deposit market share would ordinarily imply,” he said.

The same funding program weighed on margins. Management said the remaining FCNR proceeds, estimated at 25,000 crore rupees to 30,000 crore rupees, would be deployed over the next few quarters, and Q3 margins would show the full effect of mobilising those deposits.

Revenue comparison was limited by the available disclosure. The transcript cited a forecast for earnings per share of 4.07 and revenue of 113.68 billion, but said actual EPS and revenue figures were not disclosed, so a direct comparison could not be made.

The bank also pointed to broad lending growth, including retail, small and midsize business, and corporate banking. Subsidiaries contributed 1,450 crore rupees to consolidated profit, equal to 26% of group earnings, according to the transcript.

Shares closed Oct. 23 at 430.50 rupees, down 1.49% from 437 rupees, according to market data included with the transcript. The shares remained below their 52-week high of 453.1 rupees and above their 52-week low of 345.5 rupees.

Risks flagged in the transcript centred on margin pressure, the timing of FCNR deployment, unsecured loan growth and rural lending exposure. Management said repo-rate transmission was expected to begin in October, with the full effect likely in Q4 FY27.

Source: earnings-call transcript, Investing Australia, Oct. 24.