Kotak Mahindra Bank reported its financial results for the quarter ended March 31, 2025, revealing a 14% year-on-year decline in standalone net profit to Rs 3,552 crore.
The private sector lender’s performance was impacted by a significant surge in provisions and contingencies, which rose more than threefold to Rs 909 crore, reflecting a cautious stance on asset quality amid evolving market conditions.
Despite the increased provisioning, the bank managed to improve its asset quality marginally. The gross non-performing asset (GNPA) ratio stood at 1.42% as of March 31, 2025, down from 1.50% at the end of the previous quarter.
The net NPA ratio also improved to 0.31%, and the provision coverage ratio remained robust at 78%. These figures indicate Kotak’s ongoing efforts to maintain a healthy loan book even as it navigates a challenging environment.
Loan growth remained strong, with advances rising 13% year-on-year to Rs 4,44,316 crore, while deposits grew 15% to Rs 4,68,486 crore. The current and savings account (CASA) ratio was steady at 43%, and the capital adequacy ratio stood at a healthy 22.2%, underscoring the bank’s solid financial foundation.
Net interest income (NII) for the quarter increased by 5% year-on-year to Rs 7,284 crore. However, the net interest margin (NIM) contracted to 4.97% from 5.28% a year ago, though it showed a slight improvement from 4.93% in the preceding quarter. The margin pressure was attributed to a large portion of the bank’s loan book being linked to external benchmarks.
In the current declining interest rate environment, lending rates have adjusted more quickly to RBI rate cuts, while deposit rate adjustments have lagged, temporarily squeezing margins.
For the full financial year, Kotak Mahindra Bank reported a 19% rise in standalone net profit to Rs 16,450 crore, aided by a one-time gain from the divestment of Kotak General Insurance. On a consolidated basis, the group posted a net profit of Rs 22,126 crore, up 21% year-on-year.
The board of directors has recommended a dividend of Rs 2.50 per equity share of face value Rs 5 for FY25, subject to shareholder approval.
This announcement comes after the Reserve Bank of India lifted a 10-month restriction earlier this year, allowing the bank to resume issuing new credit cards and onboarding customers digitally.
Kotak Mahindra Bank’s Q4 results highlight the lender’s resilience in the face of margin pressures and rising provisions, while its strong growth in advances and deposits, improved asset quality, and robust capital position provide a stable outlook for the coming quarters.