With the third quarter (Q3FY25) results of major private sector banks announced, Kotak Mahindra Bank (KMB) has emerged as the leader of the pack, delivering impressive growth across critical business parameters.

Indian banks are facing headwinds in recent quarters vis-à-vis securing deposits. Kotak Mahindra Bank, however, has shown remarkable momentum, with its deposit growth outperforming industry peers.

On a quarter-on-quarter (QOQ) basis, KMB’s deposit growth stands at 2.59%, the highest among private banks, surpassing HDFC Bank’s growth of 2.55%. Most other lenders are struggling to match this pace, with deposit growth remaining below 1.6% sequentially.

KMB’s robust deposit growth reflects its strong positioning in the competitive banking sector, further backed by its superior loan growth. Kotak Mahindra Bank’s loan book expanded by 3.58% QOQ, the highest amongst private sector banks, showcasing its ability to drive credit demand effectively. In comparison, ICICI Bank recorded a loan growth of 2.9% QoQ, securing the second position, while HDFC Bank’s loan growth was notably weaker as it remains focused on managing its credit-deposit ratio.

Kotak Mahindra Bank slows unsecured portfolio growth in Q3FY25

Kotak Mahindra Bank has consciously moderated the growth of its unsecured lending portfolio over the past year. In Q3FY25, KMB reported a 6.7% year-on-year growth in personal loans and credit cards, the lowest among its peers. In comparison, HDFC Bank, Axis Bank, and ICICI Bank saw higher growth rates of 10.09%, 13.47%, and 11.56%, respectively.

Kotak Mahindra Bank leads Net Interest Margin (NIM) growth in Q3FY25

In Q3FY25, Kotak Mahindra Bank stood out as the only private sector lender to report an improvement in its net interest margin (NIM) on a sequential basis. The bank saw a 2 basis point (bps) increase in NIM, bucking the trend among its peers, all of whom experienced a decline.

In comparison, HDFC Bank, Axis Bank, and ICICI Bank reported drops of 3 bps, 6 bps, and 2 bps, respectively, in their NIMs. This positive NIM performance highlights Kotak Mahindra Bank’s effective margin management amidst a challenging interest rate environment.

Kotak Mahindra Bank reduces slippage ratio in Q3FY25

Kotak Mahindra Bank has outperformed its peers not only in terms of NIM but also in reducing slippages. In Q3FY25, the bank’s annualised slippage ratio decreased to 1.60%, down from 1.88% in Q2FY25. This marks the only improvement in slippages among top private sector banks, as all other peers saw their slippage ratios rise. HDFC Bank’s annualised slippage ratio increased to 1.40% from 1.25%, Axis Bank’s rose to 2.14% from 1.78%, and ICICI Bank’s climbed to 1.85% from 1.59%. Kotak Mahindra Bank’s ability to reduce slippages highlights its strong asset quality management.

Kotak Mahindra Bank maintains strong asset quality in Q3FY25

In Q3FY25, while most of its peers saw a slight increase in their gross NPA ratios on a quarter-on-quarter (QOQ) basis, Kotak Mahindra Bank has maintained strong asset quality. The bank’s gross NPA ratio movement was the second best among private sector banks, only behind ICICI Bank.

Kotak Mahindra Bank leads in capital adequacy and return on assets in Q3FY25

Kotak Mahindra Bank continues to set the benchmark in capitalisation and return ratios among its private sector peers. In Q3FY25, the bank reported the highest capital adequacy ratio (CAR) at 22.79%, significantly surpassing HDFC Bank (19.97%), Axis Bank (17.01%), and ICICI Bank (14.71%), reinforcing its strong capital position.

Additionally, Kotak Mahindra Bank maintains one of the best return on assets (ROA) ratios in the industry. The bank’s ROA stood at 2.12% in Q3FY25, slightly down from 2.17% in Q2FY25. While its peers saw a decline in ROA, HDFC Bank recorded 1.88%, Axis Bank 1.64%, and ICICI Bank 2.36%, down from 2.40% in the previous quarter.