Results Highlights:
- Interest Earned up 16.84% YoY & 10.16% QoQ at ₹15,947.73 Cr Vs (₹13,649.41 Cr YoY & ₹14,477.49 Cr QoQ).
- Net Interest Income up 15.71% YoY & 6.69% QoQ at ₹84,58.97 Cr Vs (₹7,310.74 Cr YoY & ₹7,928.43 Cr QoQ).
- NIM stood at 4.31% Vs 4.54% YoY and 4.53% QoQ.
- Operating profit up 21.14% YoY & 4.09% QoQ at ₹6,382.2 Cr Vs (₹5,268.27 Cr YoY & ₹6,131.35 Cr QoQ).
- Provision down 15.18% YoY, up 20.27% QoQ at ₹803.56 Cr Vs (₹947.42 Cr YoY & ₹668.13 Cr).
- Profit after tax up 29.47% YoY & 2.16% QoQ at ₹4,211.97 Cr Vs (₹3,253.33 Cr YoY & ₹4,122.96 Cr).
- Total Deposit up 23.21% YoY & 13.81% QoQ at ₹6,51,491.47 Cr Vs (₹5,28,776.02 Cr YoY & ₹5,72,456.13 Cr QoQ).
- Total Advances up 24.77% YoY & 16.39% QoQ at ₹5,77,294.71 Cr Vs (₹4,62,687.61 Cr YoY & ₹4,96,009.16 Cr QoQ).
- CASA Ratio Stood at 38.2% Vs 42.3% YoY & 40.3% QoQ. And Capital adequacy ratio (Basel III) stood at 21.86% Vs 22.05% YoY & 22.78% QoQ.
- Total Group branches stood at 5,968, which includes 2,327 Kotak Bank branches, while its ATM count reached 2,673.
- Consolidated Customer Assets under Management (AUM) grew 8% YoY to ₹814,118 crore in Q2FY27, up from ₹756,964 crore in Q2 FY26. Meanwhile, Total Domestic Mutual Fund (MF) AUM increased 10% YoY to ₹615,679 crore.
Assets Quality:
- GNNPA stood at 1.04% Vs 1.39% YoY and 1.18% QoQ.
- NNPA stood at 0.24% Vs 0.32% YoY and 0.27% QoQ.
Concall Highlights:
- The bank raised $5.78 billion (₹55,344 crore) through a special FCNR B deposit program, making up 9.7% of its June 2026 deposits. Driven by digital channels and 12 Middle East/South Asia partner banks, these major inflows vastly outperformed its usual market share.
- Net Interest Margin fell 22 bps to 4.31%, with the FCNR B program driving 15 bps of this drop alongside day-count changes. While management expects progressive loan deployment into higher-yielding assets to offset pressure over upcoming quarters, Q3 and Q4 margins will be shaped by competing forces: full-quarter FCNR B holding costs, ongoing asset deployment, and floating-rate yield adjustments from repo rate transmission across 60% of repo-linked loans.
- Funds from FCNRB were partially deployed to fund loan portfolio acquisitions (₹8,900 crore) and FCNR loans (₹16,100 crore); remaining proceeds will be deployed into customer assets over future quarters.
- The core deposit mobilization framework remains focused on driving everyday retail deposits through mass-affluent acquisition channels, corporate salary relationships, and enhanced digital payment application adoption.
- Core credit expansion remains anchored to the bank’s stated corporate strategy of growing advances at 1.5x to 2.0x nominal GDP growth in uncyclical customer segments, maintaining prudent underwriting parameters.
- Sequential asset creation accelerated across personal loans, business loans, credit cards, retail microcredit, SME loans, commercial vehicles, construction equipment, and corporate banking segments.
- Tractor financing expanded 11% YoY and 3% QoQ. Collection efficiencies improved with zero visible default or missed payment, though management remains watchful of potential El Niño and 13% monsoon deficit impacts.
- Growth across high-yield retail assets is strictly anchored to internal risk thresholds, targeting existing deposit customers to lower acquisition costs while maintaining rigorous risk-adjusted return metrics.
- International banking operations via Gift City expanded significantly, catering to cross-border client needs including acquisition financing, foreign currency loans, trade finance, treasury rates, security services, and deposits.
- Corporate deposits grew along with trade and tax processing. Meanwhile, payment automation investments drove a 5x surge in UPI merchant volumes and a 3% gain in NACH market share.
- Asset custody balances faced persistent pressure from muted foreign institutional investor (FII) flows during the quarter, although domestic institutional client flows remained highly supportive.
- Technology investments represent approximately 13% of total bank OPEX. Management expects to maintain this spend level to expand digitizing processes, workflow automation, and enterprise AI capabilities.
- Bank management repeated that the one-time Net Worth impact from transitioning to the ECL provisioning framework on April 1 will be strictly limited to less than 2% of capital. Management previously guided to a 12–15 bps increase in recurring credit costs post-ECL implementation, but noted that final regulatory clarifications during Q3 could potentially adjust this guidance.
- Management rejects using unsecured loans purely as a customer acquisition tool. Growth will focus on existing liability customers using granular cross-sell analytics to maintain risk-adjusted return standards.
- Management reiterated its commitment to expanding advances at 1.5x to 2.0x nominal GDP growth in uncyclical segments, leaning on excess liquidity buffers to capture market opportunities safely.
- Management confirmed internal ambitions to drive cost-to-assets lower over the next 12–24 months by scaling cross-sell ratios, automating operations, and extracting operating leverage from tech investments.
Disclaimer:
InCred Markets Limited (“the Company”), Formerly known as Elite Wealth Limited (The company is Wholly Owned Subsidiary of InCred Capital Financial Services Limited) does/ does not do business with companies covered in its research reports. Investors should be aware that the Company may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.incredmarkets.com. Analysts employed by the Company are registered/qualified as research analysts with SEBI in India. (SEBI Registration No.: INH100002300)
Disclosure Appendix
Analyst Certification (For Reports)
Vindhyachal Prasad, InCred Markets Limited, vindhyachal@elitestock.com
The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in the Company.
As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
1. All of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
2. No part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report. For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
Research Excerpts
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Ownership and material conflicts of interest Disclosure
InCred Markets Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of the Company. Analyst as officer or director: The Company’s policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
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• The Research Analyst may use Artificial Intelligence (AI) tools, to the extent applicable, for supporting research activities such as data analysis, processing of information, research assistance and preparation of research materials.
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• The extent and nature of AI usage may vary depending on the research activity. The Research Analyst shall make additional disclosures regarding AI usage whenever required.
Country Specific Disclosures
India – For private circulation only, not for sale. Legal
Entities Disclosures
InCred Markets Limited (Formerly known as Elite Wealth Limited) (IML henceforth), is a SEBI Registered Analyst having registration no. INH100002300, having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, Telephone: 0120-4477777, and Website: www.incredmarkets.com. There is no material conflict of interest with the subject company. The company and the Research Analyst have no actual or beneficial interest of one percent or more in the subject company.
The Company discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
1. Reports
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c) IML or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
2. Compensation
a) IML or its associates have not received any compensation from the subject company in the past twelve months;
b) IML or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
c) IML or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
d) IML or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
e) IML or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
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