> ## Content Index > Fetch the complete content index at: https://www.moatmarginresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # Kotak Q2: FCNR Deposits Lift the Book, Trim the Margin - URL: https://www.moatmarginresearch.com/kotak-q2-fcnr-margin/ - Published: 2026-10-25T03:49:38.000Z - Updated: 2026-10-25T03:49:38.000Z - Description: Kotak Mahindra Bank's Q2 FY27 profit rose 29% to ₹4,212 crore; ₹55,344 crore of FCNR(B) deposits lifted the balance sheet as the NIM fell to 4.31%. - Author: A K Karthikeyan - Tags: Moat Insights **Kotak Mahindra Bank's standalone profit rose 29% in the September quarter to ₹4,212 crore. Deposits grew 23% and net advances 25%, but a large part of that growth came from about ₹55,344 crore of foreign-currency FCNR(B) deposits taken in during the quarter. The bank says they were largely behind the fall in the net interest margin to 4.31% from 4.54%, and the CASA ratio fell to 38.2% from 42.3%. Excluding them, deposits grew 13%; excluding loans against them and a loan portfolio bought from Kotak Mahindra Investments, net advances grew 19%.** ## The quarter in numbers | Q2 FY27 (standalone) | Value | Year-on-year | Source | | ------------------------- | -------------- | --------------------- | ------ | | Profit after tax | ₹4,212 crore | +29% | \[M\] | | Net interest income | ₹8,459 crore | +16% | \[M\] | | Net interest margin | 4.31% | against 4.54% | \[M\] | | Fees and services | ₹2,926 crore | +21% | \[M\] | | Operating expenses | ₹5,271 crore | +14% | \[M\] | | Provisions | ₹803 crore | −15% | \[M\] | | Net advances | ₹577,295 crore | +25% | \[M\] | | Period-end deposits | ₹651,491 crore | +23% | \[M\] | | Gross / net NPA | 1.04% / 0.24% | against 1.39% / 0.32% | \[M\] | | Return on assets / equity | 1.92% / 11.65% | — | \[M\] | Consolidated profit was ₹5,645 crore, up 26% (\[M\]). ## Where the growth came from The bank says it "mobilised FCNR(B) deposits aggregating to \~₹ 55,344 crore" in the quarter (\[M\]); the presentation adds that this was "pursuant to RBI’s swap facility" (\[P\]). That is about 8.5% of period-end deposits (our arithmetic). About ₹16,110 crore of loans against FCNR(B) deposits was made through its international branches (\[M\], \[P\]). The bank states the effect plainly: - **Margin**: "The moderation in NIM was largely on account of FCNR(B) mobilisation during the quarter" (\[M\]). - **Deposits**: "Excluding FCNR (B) deposits, total deposits grew by 13% YoY" (\[M\]). - **Loans**: net advances grew 25%, but "Excluding loans provided against FCNR (B) deposits and loan portfolio acquired from Kotak mahindra Investments Ltd (KMIL), net advances grew by 19% YoY" (\[M\]). So the bank's own adjusted growth rates are several points below the headline ones on both sides of the balance sheet; the loan figure also strips out the portfolio bought from Kotak Mahindra Investments. ## Moat and margin **Focus moat: low-cost deposits.** A bank's moat shows up in what it pays for money. The CASA ratio fell to 38.2% from 42.3%, but the bank says that "Excluding FCNR (B) deposits, CASA ratio as at September 30, 2026 stood at 41.8%" (\[M\]). So, on the bank's own adjusted figure, the CASA ratio is 0.5 percentage point below a year ago (our arithmetic, 42.3% less 41.8%) once the FCNR(B) inflow is removed. Average current deposits grew 17% and average fixed-rate savings deposits 14%, slower than average term deposits at 22% (\[M\]). Cost of funds was 4.52% against 4.70% a year ago, but up from 4.46% in June (\[M\]). **Margin.** The NIM fell 23 basis points in a year and 22 basis points in a quarter (our arithmetic, from 4.54% and 4.53%). Two things kept profit growing anyway: - **Costs**: cost to assets improved to 2.40% from 2.67% (\[M\]); total assets grew 25% against operating expenses up 14% (our arithmetic from \[P\] and \[M\]). - **Credit**: annualised credit cost fell to 0.35% from 0.79%, and slippages fell 24% to ₹1,230 crore (\[M\]). Fees grew 21%, faster than net interest income at 16% (\[M\]); but fees include about ₹158 crore of processing fees on advances against FCNR(B) deposits (\[P\]), and without it fees would have grown about 15% (our arithmetic: 2,768 against 2,415). **MoatSCORE: 6.03 (AMBER, deep dive)** on the Moat Screener (\[MS\]). **New chief executive.** The board appointed Anup Kumar Saha, a whole-time director since March 2026 and formerly MD and CEO of Bajaj Finance, as MD and CEO for three years from 1 January 2027, subject to shareholders; the RBI approved the appointment on 30 September (\[D\]). ## The bear case - **The margin is lower**, and the bank attributes the fall largely to the FCNR(B) deposits; it gives no figure for the NIM without them. - **Return on equity is 11.65%** (\[M\]), against 10.38% a year ago (\[P\]); the CET1 ratio is 21.4% (\[M\]), which means a large equity base (our reading). - **Credit cost at 0.35% is the lowest of the three quarters shown** (0.46% in Q1, 0.79% a year ago, \[M\]); provisions fell 15% while profit rose 29%. - **Term deposits are growing fastest** (22% on average against 14% for fixed-rate savings deposits, \[M\]), which shifts the deposit mix away from low-cost money (our reading). - **A leadership change** is due from 1 January 2027, subject to shareholder approval (\[D\]). ## The case for - **Profit up 29%** with lower slippages and gross NPA down to 1.04% (\[M\]). - **CASA ratio of 41.8%** excluding FCNR(B) deposits, the bank's own adjusted figure (\[M\]). - **Fees up 21%** (about 15% excluding FCNR(B) processing fees, our arithmetic) and cost to assets down to 2.40% (\[M\], \[P\]). - **Capital adequacy of 21.9%** (\[M\]). ## What to watch 1. The NIM in the December quarter, and whether the bank discloses it excluding FCNR(B) deposits. 2. How the FCNR(B) money is deployed beyond the ₹16,110 crore lent so far. 3. Credit cost, after 0.35% in the September quarter. ## Sources - **\[M\]** [Kotak Mahindra Bank, Q2 FY27 media release](https://nsearchives.nseindia.com/corporate/KMBLTAB%5F24102026132632%5FMediareleaseBMOct242026SIGNED.pdf) (NSE) - **\[P\]** [Kotak Mahindra Bank, Q2 FY27 investor presentation](https://nsearchives.nseindia.com/corporate/KMBLTAB%5F24102026133347%5FInvestorPresentationOct242026SIGNED.pdf) (NSE) - **\[D\]** [Kotak Mahindra Bank, MD & CEO appointment](https://nsearchives.nseindia.com/corporate/KMBLTAB%5F24102026154235%5FOutcomeofBM24102026MDIDSIGNED.pdf) (NSE) - **\[MS\]** [Moat & Margin, Moat Screener](https://www.moatmarginresearch.com/moat-screener/) and [How MoatSCORE works](https://www.moatmarginresearch.com/moatscore/) --- > Educational research, not investment advice. Every figure above is drawn from Kotak Mahindra Bank's own filings, read from the primary documents on 25 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE read live from the Moat Screener on 25 October 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.