Kotak Mahindra Bank Q1 FY26 Results: Net Profit Falls Despite Interest Income Growth : Should Investors Worry?

Kotak Mahindra Bank declared its April–June quarter (Q1 FY26) results on Saturday, July 26, 2025, showing a 7.6% decline in net profit compared to the previous quarter. The bank reported a net profit of ₹3,281.7 crore, down from ₹3,551 crore in Q4 FY25.

Total Interest Income Up 8.5%

Despite the drop in profit, Kotak Bank’s total interest income grew by 8.5% year-on-year. It stood at ₹13,836.5 crore for Q1 FY26, up from ₹12,746 crore in the same period last year.

Net Interest Income (NII)  which represents the core income earned from lending also saw an increase. It rose 6% YoY to ₹7,259 crore, compared to ₹6,842 crore in Q1 FY25.

What Caused the Profit Decline?

Last year’s Q1 profit (₹6,249.8 crore) was higher due to a one-time gain from selling a stake in Kotak Mahindra General Insurance to Zurich Insurance. That exceptional income wasn’t part of this quarter, which partly explains the lower profit.

NPA Situation: Slight Rise in Gross NPA

Non-performing assets (NPAs) tell how much of a bank’s lending might not be paid back. For Kotak Bank:

• Gross NPA increased slightly to 1.48% in Q1 FY26 (vs 1.39% in Q1 FY25)

• Net NPA was 0.34%, almost flat compared to 0.35% a year ago

While the numbers are stable, investors should monitor the rise in gross NPA.

Kotak Mahindra Bank Share Price Update

Kotak Mahindra Bank shares ended Friday at ₹2,124.95, down 0.7% from the previous close of ₹2,141.45. Since the Q1 results were announced after market hours, the stock is expected to react when markets open on Monday, July 28, 2025.

Key Financial Highlights – Kotak Mahindra Bank Q1 FY26

Financial Metric	Q1 FY26	Q1 FY25	Change
Net Profit	₹3,281.7 crore	₹6,249.8 crore*	-47.5% (YoY)
Net Profit (QoQ)	₹3,281.7 crore	₹3,551 crore	-7.6% (QoQ)
Total Interest Income	₹13,836.5 crore	₹12,746 crore	+8.5% (YoY)
Net Interest Income (NII)	₹7,259 crore	₹6,842 crore	+6% (YoY)
Gross NPA	1.48%	1.39%	Slight increase
Net NPA	0.34%	0.35%	Stable

*Includes gain from stake sale in Kotak Mahindra General Insurance.

Analyst View & What to Expect Next

Many analysts are neutral on the stock post-earnings, noting that core operations remain strong, despite the lack of one-time income.

The growth in interest income is seen as a healthy sign, and NPAs remain under control.

Some brokerage firms may revise their targets for Kotak Mahindra Bank slightly lower, depending on the Monday reaction.

Investor Takeaway: What Should You Do?

Should you buy, hold, or sell Kotak Mahindra Bank stock after Q1 results?

Positive Points:

Steady growth in interest income

Stable asset quality (NPAs not alarming)

Robust banking franchise

Concerns:

Profit dipped due to no one-time income

Slight rise in gross NPA

Stock has underperformed peers recently

If you're a long-term investor, Kotak Mahindra Bank remains a reliable private sector bank, but short-term pressure may continue. It may be wise to wait for Monday’s market reaction before making any moves.

Investment Advisory

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