Kotak Mahindra Margin Compression Remains a Key Concern
Net Interest Income for Q4FY26 increased to ₹7,876 crore, up 8% YoY from ₹7,284 crore and 4% QoQ from ₹7,565 crore. For FY26, NII rose 6% YoY to ₹30,010 crore from ₹28,342 crore.
However, the pressure point was the Net Interest Margin. NIM stood at 4.67% in Q4FY26, lower than 4.97% in Q4FY25, though better than 4.54% in Q3FY26. For FY26, NIM declined to 4.60% from 4.96% in FY25. This YoY margin compression may have weighed on investor sentiment, as margins are a key profitability driver for banks.
Deposits and Advances Show Growth
The bank’s balance sheet continued to expand. Net advances increased 16% YoY to ₹4,96,009 crore as of March 31, 2026, from ₹4,26,909 crore a year earlier. Customer assets grew 14% YoY to ₹5,45,716 crore.
Total period-end deposits grew 15% YoY to ₹5,72,456 crore, while average total deposits also rose 15% YoY to ₹5,38,301 crore. The CASA ratio stood at 43.3% as of March 31, 2026, marginally higher than 43.0% a year earlier. The credit-to-deposit ratio increased to 86.6% from 85.5%.
Asset Quality Improved, but Credit Cost Was Higher for FY26
Asset quality showed improvement during the quarter. Slippages for Q4FY26 declined 32% YoY to ₹1,018 crore from ₹1,488 crore in Q4FY25. GNPA improved to 1.20% from 1.42% a year earlier, while NNPA improved to 0.25% from 0.31%. Provision Coverage Ratio stood at 79% against 78% as of March 31, 2025.
Provisions for Q4FY26 fell to ₹516 crore, down 43% YoY and 36% QoQ. However, for FY26, provisions stood at ₹3,481 crore compared with ₹2,942 crore in FY25. Credit cost for FY26 was 0.65% compared with 0.60% in FY25. This means that while the quarter showed improvement, the full-year credit cost was still higher than last year.
Consolidated Numbers Had One-Off Support
At the consolidated level, PAT for Q4FY26 stood at ₹5,423 crore, up 10% YoY and 10% QoQ. For FY26, consolidated PAT stood at ₹19,288 crore. However, excluding the ₹185 crore gain on Infina Finance divestment, consolidated PAT for Q4FY26 stood at ₹5,238 crore, up 6% YoY and 6% QoQ. For FY26, consolidated PAT excluding this gain stood at ₹19,103 crore, compared with ₹19,113 crore in FY25 excluding the ZKGI divestment gain.
This is another possible reason for the stock’s decline. The headline consolidated profit looked higher, but the adjusted full-year consolidated profit was almost flat compared with the previous year.
Subsidiary Performance Was Mixed
The performance of key subsidiaries was not uniform. Kotak Securities reported PAT of ₹400 crore in Q4FY26 compared with ₹348 crore in Q4FY25. However, Kotak Mahindra Prime’s PAT declined to ₹240 crore from ₹297 crore. Kotak Asset Management and Trustee Company reported a PAT of ₹184 crore compared with ₹364 crore in Q4FY25. Kotak Mahindra Life Insurance reported a PAT of ₹90 crore compared with ₹73 crore a year earlier but lower than ₹162 crore in Q3FY26.
This mixed subsidiary performance may have also kept sentiment cautious, especially when consolidated earnings growth looked modest after adjusting for one-off gains.
Return Ratios and Capital Position
Standalone ROA for Q4FY26 stood at 2.14%, while FY26 ROA was 1.97%. Standalone ROE stood at 12.27% for Q4FY26 and 11.08% for FY26. The bank’s capital position remained strong, with a Capital Adequacy Ratio at 22.4% and a CET1 ratio at 21.3% as of March 31, 2026.
The Board also recommended a dividend of ₹0.65 per equity share with a face value of ₹1, subject to shareholder approval.
Why the Kotak Mahindra Bank Share Price Fell
The 2.61% fall in Kotak Mahindra Bank’s share price appears to be linked to the gap between headline quarterly growth and the finer details of the results. Investors may have been concerned about lower NIM on a YoY basis, only 2% growth in standalone FY26 PAT, almost flat adjusted consolidated PAT for FY26, higher full-year provisions, and mixed subsidiary performance.
