Kotak Bank Q1 Preview: Healthy loan growth to drive NII, margins likely to compress

Loan growth leads the pack, but high base drags profit

Kotak Mahindra Bank is expected to register modest June quarter performance, supported by healthy momentum seen in both deposit and loan book, said analysts. The private lender is set to report Q1 results on July 26, 2025.

According to Moneycontrol's poll, Kotak Bank's net interest income (NII) is set to rise 8.5 percent year-on-year (YoY) to Rs 7,457 crore, compared with Rs 6,842 crore in the same quarter last year.

However, net profit is expected to decline sharply by 44 percent YoY to Rs 3,511 crore, primarily due to a one-time gain in Q1FY25 from the stake sale in Kotak General Insurance. Excluding that exceptional item, the profit is expected to remain largely flat against Rs 3,520 crore last year.

Estimates of analysts polled by Moneycontrol are shown to be in a narrow range, meaning any positive or negative surprises may elicit a sharp reaction in the stock price. Among the brokerages polled, Anand Rathi rolled out the most bullish projections while Axis Securities forecasted the slowest growth for Kotak Mahindra Bank.

What factors are driving the earnings?

Healthy loan, deposit growth: In its Q1 business update, Kotak Mahindra Bank reported a 14 percent YoY growth in advances to Rs 4.4 lakh crore and a 15 percent jump in deposits to Rs 5.13 lakh crore. The bank’s loan growth outpaces peers like HDFC Bank (7 percent YoY) and ICICI Bank (12 percent YoY), positioning Kotak among the top performers in the sector.

Stable asset quality: Motilal Oswal expects a slight improvement in asset quality, with the net NPA ratio likely easing to 0.33 percent in Q1FY26 from 0.35 percent a year ago.

Margins may compress: Analysts expect a sequential dip in net interest margins (NIMs), as a large chunk of Kotak’s loan portfolio is linked to floating interest rates, which tend to compress margins in a declining rate environment.

What to look out for in the quarterly show?

Management commentary on NIM trajectory, growth outlook for FY26, and any signs of meaningful pickup in the unsecured lending segment.

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