Kotak Bank Q4 Profit Declines to ₹3,552 Cr, Announces ₹2.50 Dividend

Kotak Bank Q4 Net Profit Drops Despite Strong Loan Growth and Improved Asset Quality

Kotak Mahindra Bank reported a 14% year-on-year decline in its standalone net profit for the quarter ending March 2025, with earnings falling to ₹3,552 crore, down from ₹4,566 crore in the same period last year. The drop comes despite the bank’s healthy performance in lending and deposits, as provisioning expenses surged sharply, underscoring a prudent stance on asset quality. Provisions and contingencies for the quarter rose more than threefold to ₹909 crore, reflecting cautious risk management amid a volatile macroeconomic environment. However, the bank reported a marginal improvement in asset quality, with its Gross Non-Performing Asset (GNPA) ratio declining to 1.42% as of March 31, 2025, compared to 1.50% at the end of December 2024.

Highlights:

• Standalone net profit fell 14% YoY to ₹3,552 crore.

• Provisions rose over 3x to ₹909 crore in Q4.

• GNPA ratio improved to 1.42% from 1.50% sequentially.

Net Interest Income Rises 5%, but Margins Remain Under Pressure

Kotak Mahindra Bank’s Net Interest Income (NII) for Q4 FY25 rose 5% YoY to ₹7,284 crore, signaling steady core income growth despite margin compression. The Net Interest Margin (NIM) for the quarter stood at 4.97%, narrowing from 5.28% a year earlier, though slightly higher than 4.93% recorded in Q3 FY25. The ongoing margin pressure is largely attributed to the structure of the bank’s loan book, which is heavily tied to external benchmark rates. As interest rates decline, lending rates reset faster than deposit rates, creating a lag in re-pricing liabilities that temporarily squeezes margins. Nevertheless, the slight sequential uptick in NIM suggests early signs of stabilisation.

Highlights:

• NII increased 5% YoY to ₹7,284 crore.

• NIM fell to 4.97% from 5.28% YoY but improved sequentially.

• Margin pressure linked to loan book exposure to external benchmarks.

Advances Grow 13% and Deposits Climb 15% Amid Strong Retail Demand

Loan growth remained robust for Kotak Mahindra Bank, with advances rising 13% year-on-year in the March quarter. At the same time, deposits grew by 15%, indicating continued traction in both retail and institutional banking segments. The growth in advances was driven by higher disbursement in personal, SME, and secured lending portfolios, while deposit mobilisation benefited from competitive retail products and enhanced digital onboarding experience. The improvement in deposit base also supported the bank’s funding stability despite tighter liquidity in the broader system.

Highlights:

• Loan book expanded 13% YoY in Q4 FY25.

• Deposit base grew 15% YoY.

• Growth supported by personal and SME segments.

Dividend of ₹2.50 Per Share Announced; Regulatory Curbs Lifted in February

The board of Kotak Mahindra Bank declared a dividend of ₹2.50 per share for FY25, signalling sustained shareholder confidence despite a decline in profitability. This comes after a significant regulatory development in February, when the Reserve Bank of India (RBI) lifted its 10-month restrictions on the bank. The curbs had prevented Kotak from issuing new credit cards and onboarding customers via digital platforms, citing lapses in the lender’s IT systems. With these barriers removed, the bank is now focusing on strengthening its digital infrastructure and regaining lost momentum in the high-growth retail credit card segment.

Highlights:

• Dividend of ₹2.50 per share declared for FY25.

• RBI lifted digital onboarding and credit card curbs in February.

• Bank expected to revive momentum in digital retail growth.

Stock Ends Lower Despite Results; Market Reacts to Profit Dip

On the day prior to the announcement, Kotak Mahindra Bank shares closed 0.95% lower at ₹2,185 on the BSE, reflecting subdued investor sentiment amid the drop in quarterly profit. The muted reaction indicates that while operational metrics such as loan growth and asset quality remained steady, the spike in provisions and margin compression weighed on overall investor perception. Analysts will likely monitor how quickly the bank restores profitability while managing macro risks and regaining market share in digital channels.

Highlights:

• Stock closed 0.95% lower at ₹2,185 ahead of Q4 results.

• Market response cautious due to lower profit and rising provisions.

• Focus remains on profitability recovery and digital segment rebound.