Axis Bank vs Kotak Bank: Who Leads on Margins, Loan Growth, and Slippages?

Synopsis: Axis Bank and Kotak Mahindra Bank report strong Q3 growth, with differing NIMs, loan expansion, and asset quality trends. Brokerages maintain positive outlooks, reflecting solid fundamentals.

The article outlines a detailed comparison between Axis Bank and Kotak Mahindra Bank, focusing on Q3FY26 performance across profitability, margins, loan growth, asset quality, and capital adequacy. It highlights differences in NIMs, RoA/RoE, and balance sheet metrics, while presenting brokerages’ valuations, guidance, and medium-term outlook for investors.

Incorporated in December 1993, Axis Bank Limited is a private sector bank. It has the third-largest network of branches among private sector banks and an international presence through branches in DIFC (Dubai) and Singapore, along with representative offices in Abu Dhabi, Sharjah, Dhaka and Dubai and an offshore banking unit in GIFT City

With a market capitalization of Rs 3,83,354 crore, the shares of the company are currently trading at Rs 1,233.75 per share, down by 2.01 percent from its previous day’s close. The company’s share trades at a P/B of 1.90x, with ROCE of 7.11 percent and ROE of 13.4 percent, with a 1-year stock return of 22.26 percent and a five-year return of 64 percent.

Kotak Mahindra Bank is a diversified financial services group providing a wide range of banking and financial services, including Retail Banking, Treasury and Corporate Banking, Investment Banking, Stock Broking, Vehicle Finance, Advisory services, Asset Management, Life Insurance, and General Insurance.

With a market capitalization of Rs 3,73,290 crore, the shares of the company are currently trading at Rs 375.30 per share, down by 2.13 percent from its previous day’s close. The company’s share trades at a P/B of 2.27x, with ROCE of 8.17 percent and ROE of 15.4 percent, with a 1-year stock negative return of 5.42 percent and a five-year return being flat.

Balance Sheet & Asset Quality Comparison

Axis Bank Limited 

Profitability and Margins: Axis Bank reported a PAT of Rs6,490 crore in Q3FY26, up 3 percent YoY and 28 percent QoQ. Core operating profit grew 7 percent YoY to Rs10,815 crore. NII rose 5 percent YoY to Rs14,287 crore, while NIM stood at 3.64 percent, reflecting steady profitability amid moderate margin pressures.

Balance Sheet Growth: The bank achieved robust balance sheet expansion, with deposits up 15 percent YoY (5 percent QoQ) to support a 14 percent YoY (4 percent QoQ) rise in advances. GNPA improved to 1.40 percent and NNPA to 0.42 percent, while credit cost moderated to 0.76 percent, signaling strong asset quality and disciplined lending growth.

Capital Adequacy: Axis Bank maintains a strong capital position with CET-1 at 14.50 percent, including 9MFY26 profits. Provisions of Rs6,243 crore provide an additional 43 bps cushion over reported CAR. Consolidated ROA improved to 1.57 percent and ROE to 14.15 percent, demonstrating both growth and protection in capital management.

Kotak Mahindra Bank

Profitability and Margins: Kotak Bank reported a PAT of Rs3,446 crore in Q3FY26, up 4 percent YoY from Rs3,305 crore. While absolute profits grew, efficiency ratios saw slight compression: NIM declined to 4.54 percent, ROA fell to 1.89 percent, and the cost-to-income ratio increased to 48.3 percent, reflecting moderate margin pressures.

Balance Sheet Growth: The bank demonstrated strong double-digit growth in its balance sheet. Customer assets rose 15 percent YoY to Rs529,455 crore, and deposits increased 15 percent to Rs542,638 crore. CASA ratio slightly declined to 41.3 percent, while credit quality improved, with net NPA dropping to 0.31 percent, highlighting robust lending and deposit traction.

Capital Adequacy: Kotak Bank remains well-capitalised with a Capital Adequacy Ratio of 22.6 percent and a CET-I ratio of 21.5 percent, both comfortably above regulatory requirements. Strong capitalization supports sustainable growth, underpins credit expansion, and provides a buffer for potential asset quality pressures in a challenging macroeconomic environment.

Brokerages Target & Rationale

Axis bank

Valuation and View: Axis Bank delivered a steady quarter, supported by lower provisions and operating expenses. NIM contracted 9 bps QoQ, in line with expectations, while business growth picked up, aided by strong deposit growth and a declining CD ratio, reflecting improving traction across lending and core operations.

Outlook and Recommendation

With credit costs trending down and asset quality improving, there is scope for further moderation. The bank maintains medium-term loan growth guidance above industry levels and through-cycle NIM of ~3.8 percent. FY27E RoA/RoE are projected at 1.6 percent/14.4 percent. Neutral rating is retained with a target price of Rs1,400 (1.6x Sep’27E ABV).

Kotak Mahindra Bank Ltd

Valuation and View

Kotak Mahindra Bank reported an in-line quarter, with NII and PAT largely meeting expectations. While operating expenses were higher than anticipated, lower provisions and stable PCR at 76 percent supported profitability. NIMs remained flat QoQ, slightly impacted by excess liquidity deployed in treasury instruments.

Outlook and Recommendation

Management expects NIMs to improve with ongoing deposit repricing. Loan growth is guided at 1.5–2.0x nominal GDP, supported by retail and unsecured segments, targeting ~16 percent CAGR over FY26–28E. With RoA/RoE projected at 2 percent/12.5 percent for FY27, the brokerage reiterates a BUY rating with a revised target price of Rs500 (2.3x Sep’27E ABV).

Both Axis Bank and Kotak Mahindra Bank delivered solid Q3FY26 results, demonstrating healthy loan growth, stable asset quality, and strong capitalization. While Axis shows steady margins and improving traction, Kotak benefits from robust profitability and higher RoA, reflecting differences in operational focus and portfolio mix.

Investor Takeaway: Brokerages maintain positive outlooks for both banks, with Axis rated Neutral and Kotak as Buy. Investors can weigh margin trends, credit costs, and loan growth guidance to assess potential returns, keeping in mind differences in capitalization, asset quality, and strategic growth priorities across the two banks.

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