Bank earnings increased at Kotak Mahindra Bank and IDFC FIRST Bank in the quarter ended September 30, 2026, as higher income supported profits despite narrower net interest margins. Kotak’s net profit rose 29.5% year on year to ₹4,212 crore, while IDFC FIRST’s standalone profit nearly tripled to ₹1,044.6 crore.
Key Takeaways
- Kotak’s other income grew faster than net interest income, supporting its profit increase.
- IDFC FIRST’s profit rose sharply year on year but fell 3% from the preceding quarter.
- Both lenders mobilised substantial foreign-currency deposits while reporting lower net interest margins.
Table of Contents
- Bank earnings grow faster than interest income
- Foreign-currency deposits accompany narrower margins
- IDFC FIRST profit rises annually but slips sequentially
- Conclusion
Bank earnings grow faster than interest income
Kotak Mahindra Bank’s September-quarter profit increased from ₹3,253 crore a year earlier. Other income rose 23.4% to ₹3,194 crore, while net interest income grew 15.7% to ₹8,459 crore.
Net interest income measures interest earned less interest paid. Its growth alongside a declining margin shows that a larger business can generate more interest income even when the margin on that business narrows.
Kotak’s profit also increased 2.16% from ₹4,123 crore in the preceding quarter. Group Chief Financial Officer Devang Gheewalla cited volume-led growth, rising non-interest income, sustained cost discipline and improving asset quality as strengths in the bank’s core performance.
| Item | Details |
|---|---|
| Kotak advances | ₹5.8 lakh crore; up 25% year on year. |
| Kotak deposits | ₹6.5 lakh crore; up 23.2% year on year. |
| Kotak sequential net interest income | Up 6.7% from ₹7,928.4 crore in the preceding quarter. |
Foreign-currency deposits accompany narrower margins
Kotak’s net interest margin fell to 4.1%, down 44 basis points from 4.54% a year earlier and 43 basis points from 4.53% in the previous quarter. The bank mobilised ₹55,344 crore in FCNR(B) deposits and lent ₹16,111 crore against those deposits through its GIFT City operations.
Kotak’s foreign-currency deposit features explain the funding product: FCNR deposits are term deposits available in US dollars, euros, British pounds, Australian dollars and Singapore dollars, with both principal and interest freely repatriable.
Excluding the NRI inflows, Kotak’s advances grew 19% year on year and deposits increased 23%. That distinction helps separate underlying lending expansion from growth that included the foreign-currency inflows.
IDFC FIRST profit rises annually but slips sequentially
IDFC FIRST Bank’s standalone net profit increased from ₹352.3 crore in the September 2025 quarter, supported by higher net interest income and fee income. Net interest income rose 21% to ₹6,184 crore from ₹5,113 crore.
The annual improvement contrasted with a 3% sequential decline in profit from ₹1,075 crore in the preceding quarter. Its net interest margin fell 32 basis points to 5.58% from 5.90%, while FCNR(B) deposits mobilised during the quarter totalled ₹34,390 crore.
AU Small Finance Bank also reported stronger September-quarter earnings, with profit rising 53% to ₹858 crore and net interest income increasing 32% year on year.
Conclusion
The September 2026 results show stronger annual profits without a corresponding improvement in margins at Kotak and IDFC FIRST. Their next quarterly disclosures will provide the next check on whether lending and fee-income growth continue to offset narrower interest margins.
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