Kotak Mahindra Bank Ltd. Q3 FY2026 Earnings Call Transcript
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Overview
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Detailed Analysis
Sentiment
Positive
Executive Summary
Kotak Mahindra Bank Q3 FY26: PAT ₹3,400 Cr; consolidated PAT ₹4,900 Cr, both up YoY
Kotak Mahindra Bank reported Q3 FY26 on a standalone and consolidated basis, with standalone PAT at ₹3,400 Cr and consolidated PAT at ₹4,900 Cr. Net advances grew 16% YoY and total deposits grew 15% YoY, reflecting broad-based balance-sheet expansion. Profitability stayed resilient as NIM held at 4.54% and credit cost fell to 63 bps from 79 bps in Q2. A key strategic update was the continued scaling of the four focus segments, with 811, Solitaire, SME, and institutional businesses all contributing to growth. Results also included one-offs from the new labour code, with ₹96 Cr pre-tax impact at...Management ToneHigh
Confident on
Deposit granularization and CASA building
Credit-cost normalization and asset quality
Consumer franchise repositioning through Solitaire and 811
Subsidiary profitability and group breadth
Evasive / Deflected on
RBI audit / Agri PSL findings
Exact product-level mix for card-linked personal loans
Detailed quantification of institutional SA outflows
"Trust me, it hasn't happened by chance."
Net advancesPage 4
16% YoY growthvs 1.5x to 2x nominal GDP growth philosophy
Total depositsPage 6
15% YoY growthvs 15% YoY in Q2/Q3 trajectory
NIMPage 4
4.54%flat vs 4.54% in Q2 FY26
PATPage 7
₹3,400 Crvs prior quarter affected by labour code cost
Credit costPage 8
63 bpsvs 79 bps in Q2 FY26 and 93 bps in Q1 FY26
Gross NPAPage 8
1.30%vs 1.39% in Q2 FY26
Consolidated PATPage 8
₹4,900 Crvs ₹4,400 Cr in Q3 FY25
Subsidiaries profitPage 17
₹1,453 Crvs prior year up 11% YoY and 19% sequentially
Key Speakers
5
Ashok VaswaniMD & CEOframed the strategy, defended consumer-banking changes, and emphasized disciplined scaling rather than size for its own sake.
Devang GheewallaGroup CFOquantified NIM, costs, asset quality, credit cost and capital metrics, and clarified the impact of treasury liquidity and labour-code provisions.
Pranav MishraDeposits Franchiseexplained the granularity-led CASA strategy, 811/811 Super positioning, and the shift away from bulky institutional savings.
Paritosh KashyapWholesale Bankingdetailed CA stickiness, CMS-led growth, and the role of financial-sector clients in deposit momentum.
Jaideep HansrajSubsidiarieshighlighted 30% contribution of subsidiaries to consolidated profits and the rebound in AMC, capital markets and insurance.
Key Highlights
7
Standalone operating performance improved across net interest income, fee income and credit cost, while operating expenses also rose due to acquisition and volume-related costs.
Credit costs declined sequentially from 93 bps in Q1 to 79 bps in Q2 and 63 bps in Q3, with management attributing the improvement mainly to lower unsecured-business credit costs and better collections.
The bank said mortgage assets grew 18% YoY, aggregate SME advances grew 17% YoY, and tractor finance stayed at 16% YoY, underscoring broad loan growth across retail, SME and rural books.
Deposits stayed granular, with average current account balances up 14% YoY and fixed-rate savings balances up 12% YoY, supporting a 41.3% CASA ratio.
Q3 expenses included a ₹96 Cr pre-tax labour-code provision at the bank and ₹128 Cr at group level, which management said affected reported profitability.
The company highlighted a strategic build-out in affluent and core India through Solitaire, 811 and 811 Super, with management saying 811 was back to acquiring a large number of customers every month.
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Q&A Highlights
6
Kunal Shah forced management to explain the flat NIM, revealing that 4.54% was held down by IPO-related short-term funds and that ex-treasury drag NIM would have been 4.58%.
On credit cost, Devang disclosed that unsecured-business credit cost is now behind them and that microfinance and personal loan credit costs have already started decreasing, while credit card credit cost has plateaued.
Marukh Adajania elicited a quantified ECL view
Rikin Shah extracted a useful clarification that current account growth is not just wholesale deal CA; consumer banking and SME also contributed to the sequential improvement.
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Key Highlights
7
Standalone operating performance improved across net interest income, fee income and credit cost, while operating expenses also rose due to acquisition and volume-related costs.
Credit costs declined sequentially from 93 bps in Q1 to 79 bps in Q2 and 63 bps in Q3, with management attributing the improvement mainly to lower unsecured-business credit costs and better collections.
The bank said mortgage assets grew 18% YoY, aggregate SME advances grew 17% YoY, and tractor finance stayed at 16% YoY, underscoring broad loan growth across retail, SME and rural books.
Deposits stayed granular, with average current account balances up 14% YoY and fixed-rate savings balances up 12% YoY, supporting a 41.3% CASA ratio.
Q3 expenses included a ₹96 Cr pre-tax labour-code provision at the bank and ₹128 Cr at group level, which management said affected reported profitability.
The company highlighted a strategic build-out in affluent and core India through Solitaire, 811 and 811 Super, with management saying 811 was back to acquiring a large number of customers every month.
Within subsidiaries, Kotak Securities market share rose to 13.5% from 11.5% YoY, while Kotak AMC and Trustee grew 31% YoY and life insurance AUM crossed ₹1 lakh Cr.
Guidance & Outlook
5
Management commentary
Kotak expects Q4 FY26 NIM to see a moderate increase, helped by a full-quarter CRR benefit, though the June repo cut will still flow through floating-rate advances.
“we will see a moderate increase in Q4 NIM” — page 19
Management commentary
Management commentary
Management commentary
Management commentary
Risks & Concerns
5
Management flagged continued caution on the retail commercial vehicle book, which remains under pressure despite improvements in other unsecured businesses.
The Q3 reported NIM was held back by higher short-term liquidity deployed into treasury assets, which diluted yields mathematically.
Construction equipment remained weak, with industry sales down 14% YoY in Q3 and around 10% for YTD December due to slower infra activity and delayed project execution.
Management refused to comment on RBI audit findings around Agri PSL and would not quantify the issue, which leaves regulatory risk unresolved.
Credit card growth is still muted, and management said Q3 was generally a very muted quarter for credit cards across the industry.
Q&A Highlights
6
Kunal Shah forced management to explain the flat NIM, revealing that 4.54% was held down by IPO-related short-term funds and that ex-treasury drag NIM would have been 4.58%.
On credit cost, Devang disclosed that unsecured-business credit cost is now behind them and that microfinance and personal loan credit costs have already started decreasing, while credit card credit cost has plateaued.
Marukh Adajania elicited a quantified ECL view
Rikin Shah extracted a useful clarification that current account growth is not just wholesale deal CA; consumer banking and SME also contributed to the sequential improvement.
Management quantified the Standard Chartered personal-loan runoff at less than ₹1,500 Cr, about 20% of the original book, and said it should run down over the next two quarters.
Ashok Vaswani drew a hard line on IDBI, saying every opportunity is filtered through strategy, valuation and integration bandwidth, which implies Kotak will avoid empire-building for size alone.
AI-generated analysis. May contain inaccuracies — verify against original sources.