KOTAKBANK

Battles Costs Despite Profit Growth

reported a 13% YoY rise in net profit to ₹4,026 crore in Q4FY26, supported by lower credit costs and improved margins. However, rising operating expenses and a high cost-to-income ratio remain challenges. The bank is focusing on safer lending segments and efficiency initiatives to sustain profitability. Financial Performance (Q4FY26) Net profit: ₹4,026 crore (+13% YoY). Pre-provisioning operating profit (PPOP): ₹5,803 crore (+6.5% YoY). Net interest margin (NIM): 4.67% (+13bps QoQ). Credit cost: ₹536 crore, down sharply. Slippages: declined, reflecting improved asset quality. Balance Sheet & Lending Mix CASA deposits: remain strong, supporting low-cost funding. Term deposits: rising, reflecting competitive deposit market. Loan mix: Secured lending (home loans): growing, supporting asset quality but capping NIM. Unsecured retail loans (credit cards, personal loans): flat sequentially as share of advances. Risk management: cautious stance on unsecured growth, balancing profitability with asset quality. Cost Challenges Cost-to-income ratio (C-I ratio): elevated, highlighting efficiency battle. Operating expenses: rising, driven by expansion and technology investments. Focus remains on improving productivity and digital adoption to lower costs. Strategic Outlook Pursuing growth in secured retail segments to maintain asset quality. Unsecured lending to remain selective, limiting risk exposure. Efficiency gains and cost discipline will be critical to sustaining margins. Analysts expect profitability to improve if cost pressures ease and credit costs remain contained.