Private Banks Face Margin Squeeze and Growth Divergence

Strategic Insights -

Private banks in India are grappling with a margin squeeze due to a decline in net interest margins (NIMs) and a rise in provisions, according to their quarterly results. The results of HDFC Bank, Axis Bank, IndusInd Bank, and Kotak Mahindra Bank have highlighted a challenging operating environment for private banks in the September 2025 quarter.

The decline in NIMs was attributed to a lag in deposit rate cuts following the central bank's decision to reduce the repo rate in June 2025. Despite this, Kotak Mahindra Bank's standalone advances grew nearly 15.8% year-over-year (y-o-y) to Rs 4.62 lakh crore in the September 2025 quarter. HDFC Bank's advances grew 10% y-o-y to Rs 27.46 lakh crore, while IndusInd Bank's advances fell 9% y-o-y to Rs 3.25 lakh crore.

Key Takeaways:

  • Kotak Mahindra Bank's net interest margin (NIM) declined to 4.54% in the September 2025 quarter from 4.91% a year earlier.
  • HDFC Bank's NIM slipped to 3.4% in the September 2025 quarter from 3.7% a year earlier.
  • IndusInd Bank's NIM declined to 3.32% in the September 2025 quarter from 4.08% a year earlier.
  • Kotak Mahindra Bank's standalone advances grew nearly 15.8% y-o-y to Rs 4.62 lakh crore in the September 2025 quarter.
  • HDFC Bank's advances grew 10% y-o-y to Rs 27.46 lakh crore in the September 2025 quarter.
  • IndusInd Bank's advances fell 9% y-o-y to Rs 3.25 lakh crore in the September 2025 quarter.
  • The new MD and CEO of IndusInd Bank, Rajiv Anand, has highlighted caution on microfinance disbursement.
  • Kotak Mahindra Bank made provisions of Rs 947.4 crore in the September 2025 quarter, a rise of 43.5% y-o-y.
  • Higher provisioning resulted in Kotak Mahindra Bank's standalone net profit declining nearly 2.7% y-o-y to Rs 3,253.3 crore in the September 2025 quarter.
  • HDFC Bank made provisioning to the tune of Rs 3,500 crore in the September 2025 quarter vis-à-vis Rs 2,700 crore a year earlier.
  • HDFC Bank's standalone net profit rose 10.8% y-o-y to Rs 18,641.3 crore in the second quarter of FY26.
  • IndusInd Bank reported a standalone net loss of Rs 444.8 crore in the September 2025 quarter vis-à-vis a net profit of Rs 1,325.5 crore a year earlier.
  • Kotak Mahindra Bank's return on average assets was 0.47% in the September 2025 quarter, and on annualizing it would be nearly 1.88% for FY26.
  • HDFC Bank's return on assets (average) was 0.49% in the September 2025 quarter, and on annualizing for FY26 it would be nearly 1.96%.
  • IndusInd Bank's return on assets (annualized) was negative 0.33% in the September 2025 quarter.

Statistics:

  • Kotak Mahindra Bank's NIM: 4.54% in the September 2025 quarter (down from 4.91% a year earlier).
  • HDFC Bank's NIM: 3.4% in the September 2025 quarter (down from 3.7% a year earlier).
  • IndusInd Bank's NIM: 3.32% in the September 2025 quarter (down from 4.08% a year earlier).
  • Kotak Mahindra Bank's standalone advances: Rs 4.62 lakh crore (up 15.8% y-o-y).
  • HDFC Bank's advances: Rs 27.46 lakh crore (up 10% y-o-y).
  • IndusInd Bank's advances: Rs 3.25 lakh crore (down 9% y-o-y).
  • Kotak Mahindra Bank's provisions: Rs 947.4 crore (up 43.5% y-o-y).
  • HDFC Bank's provisioning: Rs 3,500 crore (up from Rs 2,700 crore a year earlier).
  • HDFC Bank's standalone net profit: Rs 18,641.3 crore (up 10.8% y-o-y).
  • IndusInd Bank's net loss: Rs 444.8 crore (down from a net profit of Rs 1,325.5 crore a year earlier).

Sources:

  • [Kotak Mahindra Bank Q2FY26 results] (Financial Express, October 11, 2025)
  • [HDFC Bank Q2FY26 results] (Financial Express, October 11, 2025)
  • [IndusInd Bank Q2FY26 results] (Financial Express, October 11, 2025)
  • [Amriteshwar Mathur, Financial Journalist with over 20 years of experience] (Contify, October 11, 2025)