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Kotak Mahindra Bank (Target Price - ₹ 515, BUY) - “Steady Q3, Credit cost eases further”

ICICIdirect Research 30 Jan 2026 DISCLAIMER

Kotak Mahindra Bank continued to deliver steady performance, marked by advances growth of 16% YoY (4% QoQ), led by strong traction in business banking and mortgages, while deposits rose 14.6% YoY (2.6% QoQ) with CASA at 41.3% (down 100 bps). Management expects loan growth to remain aligned with its medium-term guidance of ~1.5–2x nominal GDP, led by sustained momentum in business banking, mid-market and secured retail segments.
NIM stood at 4.54% (flat QoQ) as benefits from deposit repricing and CRR cut offset the impact of repo rate transmission and temporary deployment of surplus liquidity in low-yield treasury asset. Management expects margins to show greater stability from Q1FY27, as TD (Term deposit) repricing (9– 12M maturity) largely completes, CRR benefits flow fully, and short-term liquidity distortion unwinds.
On the asset quality front, management expects credit cost to trend toward ~55–60 bps over the medium term, supported by improving collections in MFI, personal loans and credit cards, while stress in retail CV is likely to remain contained through calibrated underwriting. Credit cost declined to 63bps (vs. 79bps Q2FY26) and management expects further credit cost normalization ahead. ECL transition impact (post-tax) is guided at <2% of NW.
We expect the bank to deliver ~15% CAGR in business and RoA at ~2.1%. At current valuation, we remain constructive on the stock within large cap banks.

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