Kotak Mahindra Bank Q1 Profit Jumps 22.6%; CEO Vaswani to Exit

Mumbai, Jul 18 (PTI) Private lender Kotak Mahindra Bank on Saturday reported a 22.55 per cent rise in consolidated net profit to Rs 5,480.46 crore in the June quarter.

On a standalone basis, net profit of the bank stood at Rs 4,122.96 crore during the quarter, compared to Rs 3,281.68 crore in the year-ago period.

The bank's core net interest income increased 9 per cent to Rs 7,928 crore from Rs 7,259 crore a year earlier.

However, the bank's net interest margin has reduced to 4.53 per cent in the first quarter of the current fiscal year, from 4.65 per cent in the year-ago period and 4.67 per cent in the quarter-ago period.

The bank's fee and services income increased 11 per cent to Rs 2,500 crore, from Rs 2,249 crore a year ago. On a sequential basis, it was down 10 per cent.

Kotak Mahindra Bank Managing Director and Chief Executive Officer Ashok Vaswani said his decision to step down at the end of December this year was driven by both professional and personal considerations, asserting that the lender is now well positioned for its next phase of growth after completing significant restructuring over the past three and a half years.

Vaswani said the bank had overcome the technology embargo, rebuilt its management team, cleaned up its personal loan, credit card and microfinance portfolios, and strengthened its liability franchise in the last few years under him.

"I think the bank and the group... are very well set now to accelerate our journey. So... may not be a bad time to step away," he said during the post-earnings conference call.

On succession, Vaswani said the board and the Nomination and Remuneration Committee (NRC) would initiate the process in accordance with the Reserve Bank of India guidelines.

Noting that the bank has a very strong bench internally, he said the NRC will do what is right for the group and will look for the best talent there is available, indicating that the search could extend beyond internal candidates.

He added that the decision to step down was well thought through and not taken overnight.

Total deposits of the bank grew 14 per cent year-on-year to Rs 5.59 lakh crore in Q1FY27, from Rs 4.92 lakh crore in Q1FY26, according to the investor presentation.

Kotak Mahindra Bank's current account and saving account deposit base moderated to 40.3 per cent from 43.3 per cent in the quarter ago period.

On the FCNR-B window, Vaswani said demand from non-resident Indian (NRI) customers has been strong, though the pace of mobilisation will depend on the bank's ability to arrange leverage through partner institutions.


"The NRI customer demand is very strong because it's such an attractive opportunity. It's our ability to get the supply side done, which is going to make the difference," he said.

The bank plans to source FCNR(B) deposits through its GIFT City and Dubai International Financial Centre (DIFC) operations and is in advanced discussions with banks across Asia, the Middle East and other regions to enhance its offering.

"We will partner with banks in Asia and Middle East and other parts of the world to try and enhance our proposition," Vaswani said.

Vaswani said the bulk of inflows are expected to be in the three- and five-year maturity buckets, which will help lengthen the tenor of Kotak Mahindra Bank's deposit base.

While the lender's existing deposit book is about Rs 5 lakh crore and FCNR(B) deposits will not completely move the needle, they will help the bank elongate deposit book to some extent and create a greater degree of stability, he said.

The central bank had introduced the special FCNR-B window during the June monetary policy committee (MPC) meeting, including bearing the cost of currency hedging, to increase foreign capital inflows and bolster India's external position.

The bank has seen a 15 per cent year-on-year jump in advances to Rs 5.28 lakh crore in the June quarter, from Rs 4.59 lakh crore a year ago.

Vaswani said the bank had disbursed around Rs 3,000 crore under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 scheme, with the government-backed programme continuing to remain part of its loan portfolio.

The loans were extended to the MSME and SME customers of the bank.

The management indicated that the bank is closely monitoring the performance of these loans as repayments progress.

The lender did not flag any material concerns around its ECLGS portfolio during the earnings call, suggesting that the scheme has so far performed broadly in line with its expectations.

Further, the management said gold loan portfolio remains small but is emerging as a key focus area for growth. The lender is expanding branch coverage for gold loans and said the portfolio is growing at a healthy pace compared with the overall loan book.

On the credit cards front, the management said the bank has resumed growth in its credit card business after overhauling the portfolio and tightening its customer strategy.

"We have finally started growing the credit card book," the management said, adding that the bank would issue more cards to existing customers and their families to build a very profitable cards business, while refraining from providing a growth target for FY27.

The bank's asset quality also improved in the quarter, with gross non-performing asset ratio at 1.18 per cent as on June 30, 2026, from 1.48 per cent on June 30, 2025, and 1.20 per cent as on March 31, 2026.