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Kotak Mahindra Bank shares rally on robust loan, deposit growth in Q1
Shares of the bank closed at ₹2,224.5 on the BSE on Tuesday, up 3.61 per cent.
In its quarterly business update, the bank reported 14 per cent year-on-year (Y-o-Y) and 4.2 per cent sequential growth in net advances to ₹4.44 trillion in Q1.
During the same period, the bank's net deposits rose 14.6 per cent Y-o-Y and 2.8 per cent quarter-on-quarter (Q-o-Q) to ₹5.12 trillion.
'Kotak (standalone), in its pre-quarter update, reported 14 per cent Y-o-Y (4 per cent Q-o-Q) loan growth and about 15 per cent Y-o-Y (2.8 per cent Q-o-Q) deposit growth. These were better than our expectations and also better than private peers,' said Macquarie Research in its note.
It added that with Y-o-Y system deposit and loan growth at about 10 per cent levels (as on June 13, 2025), the reported numbers (of the bank) are encouraging.
While low cost deposits — current account savings account (Casa) — growth of the private sector lender was 8 per cent Y-o-Y in Q1 to ₹2.09 trillion, sequentially it reported a drop of 2.2 per cent.
Meanwhile, analysts have pointed out that Kotak Mahindra Bank has the largest share of external benchmark-linked loans among peers, at 60 per cent of its loan book.
HDFC Bank has 45 per cent of its loan book linked to the external benchmark-linked loan rate (EBLR), while ICICI Bank and Axis Bank have 53 per cent and 54 per cent, respectively.
With the front loading of rate cuts, focus shifts on the extent of margin compression in Q1 and the coming quarters. 'We factor in a 15 basis points (bps) Q-o-Q margin decline in Q1', Macquarie Research said.
At the end of Q4FY25, the bank reported a net interest margin (NIM) of 4.97 per cent, down from 5.28 per cent in the corresponding period a year ago.
'…going forward, the bank has levers on the liability side to navigate through the rate-cut cycle. These include repricing of the savings book and sweep deposit book, strong growth in Casa balances and reduction in term deposit rates. Further commentary around the credit cost trajectory, slippages trend in the unsecured segment (including MFI) remains a key monitorable,' the report further said.
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