Kotak Mahindra Bank's Q2 profit surges 26% to ₹5,645 crore

Kotak Mahindra Bank reported a consolidated net profit of ₹5,645 crore for the second quarter, marking a 26 per cent year-on-year increase and underscoring robust operational performance amid a competitive banking environment.

The bank's standalone profit expanded by 29 per cent, bolstered by a 16 per cent growth in net interest income, the primary revenue driver for banks. Cost pressures eased as provisions fell during the quarter, contributing to improved profitability metrics.

However, the bank's net interest margin, a key measure of lending profitability, narrowed to 4.31 per cent from higher levels previously. This compression was primarily attributed to significant inflows of foreign currency non-resident account deposits, which typically carry lower yields than domestic rupee deposits.

The margin pressure reflects broader sector dynamics as banks compete aggressively for deposits amid elevated systemic liquidity and changing customer preferences towards foreign currency holdings. Despite the margin headwinds, Kotak Mahindra Bank's earnings growth demonstrated the lender's ability to expand its revenue base and manage costs effectively.