Kotak Mahindra Bank, one of India’s premier private sector lenders, has demonstrated steady performance across asset and liability fronts. Citi’s report underscores that advances have grown robustly and deposits have maintained a strong pace, underscoring consistent franchise growth despite sector-wide competition for liabilities. The brokerage expects the momentum to continue into FY26, supported by balanced retail and corporate loan expansion.

The analyst team also acknowledged the bank’s digital transformation and product diversification, which continue to attract high-quality customers. Kotak’s strong capital adequacy and cautious risk approach make it a preferred pick among private sector banks.

Citi’s note points to robust advances growth that aligns with India’s broader credit expansion trend. Retail loans, particularly unsecured segments, have expanded steadily, while wholesale lending remains disciplined. The report mentions that deposit growth remains strong, with Kotak maintaining its leadership in low-cost CASA deposits.

The lender’s granular deposit base continues to underpin its funding stability, allowing management to optimize loan pricing while maintaining NIMs near the 5% mark. This balance between growth and prudence reflects the bank’s consistent execution in a high-competition environment.

According to Citi, microfinance (MFI) stress peaked in Q1, and incremental stress levels are now receding. The improvement in collection efficiency and controlled provisioning have contributed to stabilizing asset quality. Furthermore, the personal loan credit cost trajectory is improving, supported by better underwriting and portfolio diversification.

The bank’s strategic focus on cross-selling to existing customers and leveraging digital channels has enhanced loan origination quality. Citi believes that the normalization in credit costs will directly translate to better profitability over the next two quarters.

Citi’s target price of ₹2,525 reflects its confidence in Kotak Mahindra Bank’s consistent execution and earnings visibility. Analysts foresee moderate NIM pressure offset by loan growth and cost discipline. The brokerage expects the lender to maintain its superior RoA and RoE compared to peers, driven by a healthy capital base and stable liability franchise.

With asset quality metrics improving, Kotak is well positioned for long-term compounding, particularly as macro conditions stabilize and private credit growth picks up pace in FY26.

Citi’s bullish outlook on Kotak Mahindra Bank underlines the lender’s robust fundamentals, improving asset quality, and strong growth trajectory. The easing of MFI stress and declining credit costs suggest that the worst may be behind for unsecured lending portfolios. Kotak’s steady deposit base, digital initiatives, and capital efficiency continue to differentiate it from peers.

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