Kotak Mahindra Bank’s Q4 FY2025 net profit fell by 14% to ₹3,551.74 crore, driven by higher provisions. Despite strong loan and deposit growth, the increase in provisions and asset quality pressure impacted its profitability.
Kotak Mahindra Bank, one of India’s leading private sector banks, reported a 14% decline in net profit for Q4 FY2025, amounting to ₹3,551.74 crore. The drop in profitability was primarily attributed to a significant rise in provisions for potential bad loans, which tripled to ₹9.09 billion.
Analysts had projected the bank to report a profit of ₹36.25 billion, according to LSEG estimates. Despite the decline in profit, Kotak’s loan book grew by 13% in value terms, while deposits increased by 15% in the same quarter.
The bank’s provisions and contingencies surged due to concerns over asset quality, though its gross non-performing assets (GNPA) ratio improved slightly to 1.42% at the end of March, from 1.50% in December. This indicates a modest improvement in the quality of its loan book.
Kotak’s net interest income, the difference between earnings from loans and interest paid on deposits, rose 5% to ₹72.84 billion. However, the net interest margin (NIM) shrank to 4.97% from 5.28% a year earlier, though it showed slight improvement from 4.93% in the previous quarter.
The decrease in NIM was largely attributed to the bank’s large loan book linked to the external benchmark, which has placed additional pressure on margins amid a falling interest rate scenario.
In February, the Reserve Bank of India (RBI) lifted a 10-month ban on Kotak, which had restricted the bank from issuing credit cards and enrolling clients digitally due to gaps in its IT systems. This regulatory hurdle has now been cleared, opening up new opportunities for growth.
Shares of Kotak Mahindra Bank closed 0.9% lower on May 1, 2025, ahead of the results.
