What led to Kotak Bank’s Q4 FY25 profit fall?
Kotak Mahindra Bank’s Q4 FY25 results turned out to be weaker than expected, and the Kotak Bank share price reacted instantly. The bank’s standalone net profit dropped to ₹3,552 crore, down 14% year-on-year, while consolidated profit came in at ₹4,933 crore.
Net interest income (NII) rose by 5% to ₹7,284 crore, but the net interest margin (NIM) fell to 4.97% from 5.28% last year. Total operating income stood at ₹27,174 crore, a slight drop from the previous year, and total expenses came in at ₹19,683 crore.
The major issue? Provisions. The bank had to set aside ₹909 crore for bad loans, more than triple what it did last year. This sudden spike in credit costs overshadowed the growth in loans and deposits, unsettling investors and dominating Kotak Bank share news across platforms.
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Kotak’s Q4 at a glance
| Metric | Q4 FY25 | Q4 FY24 | Change |
| Standalone Net Profit | ₹3,552 crore | ₹4,133 crore | -14% |
| Consolidated Net Profit | ₹4,933 crore | ₹5,337 crore | -8% |
| Net Interest Income (NII) | ₹7,284 crore | ₹6,909 crore | +5% |
| Total Income | ₹27,174 crore | ₹27,907 crore | -3% |
| Total Expenditure | ₹19,683 crore | ₹20,690 crore | -5% |
| Net Interest Margin (NIM) | 4.97% | 5.28% | -31 bps |
Despite steady deposit and loan growth, earnings were dragged down by higher provisioning and narrowing margins. For retail investors watching Kotak Bank share price trends, this was a signal to reassess short-term expectations.
What’s happening with asset quality?
The bank’s asset quality remains stable, but cracks are showing, especially in microlending. Gross non-performing assets (GNPA) rose slightly to 1.42% from 1.39% a year ago, while Net NPA improved marginally to 0.31% from 0.34%.
Provision coverage ratio increased to 78%, indicating that the bank is being cautious and reserving more to cover bad loans.
The red flag? Its microfinance arm posted a ₹91 crore loss this quarter after a profit in the same period last year. While not alarming on its own, it’s part of a broader trend where unsecured lending is facing pressure, a key point of concern.
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What are brokerages saying?
Analysts and brokerage houses responded with a mixed tone, some optimistic long-term, others more cautious in the near term.
- Motilal Oswal kept a ‘Buy’ rating with a target of ₹2,500, citing stable asset quality and strong deposit growth.
- Nuvama shifted from ‘Buy’ to ‘Hold’ while increasing the target to ₹2,350, calling valuations rich post recent rally.
- Elara Capital downgraded to ‘Accumulate’, raising the target price to ₹2,330, citing a soft quarter but strong fundamentals.
- Nomura moved to ‘Neutral’ with a revised target of ₹2,200, noting slower NII growth and higher opex.
- Others trimmed growth estimates while maintaining medium-term confidence.
Overall, Kotak Mahindra Bank share analysis among brokerages shows a reset of expectations. Most still see it as a fundamentally strong bank, but now with some caution around near-term profitability.
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Deposit and loan growth still solid
Despite the earnings miss, Kotak delivered strong deposit growth, average total deposits grew 15% YoY to ₹4,68,486 crore. Loan growth was also healthy, rising 13% YoY, though sequential momentum slowed a bit.
Net Interest Margin for the full year came in at 4.96%. The bank’s capital position remained robust with CET1 at 21.1%.
So while Q4 wasn’t stellar, the fundamentals still hold strong, a key insight for anyone evaluating Kotak Bank for long-term investing.
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Conclusion
Yes, the Q4 numbers missed expectations. And yes, the Kotak Bank share price took a hit. But the bank’s overall health isn’t in danger ,it’s more about adjusting to margin pressure and provisioning.
For investors, this might just be a reset, not a red flag. With solid retail growth, decent asset quality, and strong capital buffers, Kotak Mahindra Bank is still among the top private banks to watch.
Just don’t expect a straight-line uptrend. Like all things in the market, it’s a mix of short-term bumps and long-term bets.
