Ladies and gentlemen, good day, and welcome to the Kotak Mahindra Bank Q3 FY 2026 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Ashok Vaswani, Managing Director and CEO of Kotak Mahindra Bank. Thank you, and over to you, sir.
Thank you. Thank you so much, operator. Good evening. Good evening, everyone, and thank you for joining us. Before I begin, let me welcome Anup Saha, our new WTD designate. Anup brings over three decades of vast experience and domain expertise across many fields, including retail finance, analytics, risk, collections, and financial service operations. He will oversee our Consumer Bank , data analytics, and marketing verticals. His addition strengthens our leadership team and accelerates our ability to execute at scale. Moving on to today's agenda, I'll make some opening remarks. Devang will cover the numbers in detail. Pranav, the deposit franchise, Vyomesh, consumer assets, Manish, commercial banking, Paritosh, wholesale banking and institutional businesses, and finally, Jaideep will update you on our subs.
Let me first talk a little bit about the macroeconomic environment. The global landscape has become more volatile. Geopolitical tensions, trade and tariff uncertainties have weighed on global investor confidence. While there seems to be a high level of confidence to get a trade deal with the E.U., the absence of a final trade agreement with the U.S. continues to add to this uncertainty. We have seen unprecedented strengthening of gold and silver and outflows from India by FIIs to other markets that are perceived to be more attractive to foreign investors. However, the Indian economy continues to demonstrate strong and stable growth. GDP growth continues to be resilient with a positive outlook. This is supported by several enabling actions, like the RBI's repo rate cuts and GST rate rationalization. 3Q also saw an uptick in growth, led by the usual festive demand. Rural India overall looks stable, supported by good monsoons.
The rupee weakness has partly offset tariff impacts, but has also affected foreign flows and liquidity. With respect to capital flows, while FIIs have been net sellers, domestic institutional investors have provided support with around $24 billion in inflows in Q3 FY 2026, reinforcing the savers to investors trend. This is also evident in the strong IPO pipeline expected for calendar 2026. In the banking sector specifically, system credit growth has been healthy, but the flows into commodities and capital markets are putting more pressure on low-cost deposits. There is enhanced volatility seen in the banking sector liquidity. While benchmark rates are reduced, longer-term treasury yields have gone down. Within this context, coming to Kotak, we remain focused on our strategy to scale responsibly. This discipline is reflected in our quarterly performance.
In the bank, net advances grew 16% Y-o-Y. This is in line with our stated philosophy of growing our advances in the range of 1.5x-2x nominal GDP growth. We have seen consistent growth of around 4% per quarter for the last three quarters of this financial year. Average deposits grew 15% year-on-year. We have been focusing on granular CASA growth. This is on the back of our focused segment strategy, and I will come to that shortly. We called out unsecured retail loans earlier. We said we would gradually--we would grow gradually and responsibly, with the unsecured assets growing in absolute terms in the first instance, and that's exactly what we have done and will continue to do so. The bank's NIM continues to be healthy at 4.54%, supported by a low cost of funds.
Credit cost, as indicated previously, continues a downward trend, supported by our updated underwriting models and enhanced collection efforts. Credit costs are down sequentially from 93 basis points in Q1 to 79 basis points in Q2, and now 63 basis points in Q3. But within this, we continue to watch the retail CV segment carefully. Overall, we expect normalization of credit costs to continue, though at a more moderated pace. Total operating expenses continue to remain under control as we drive productivity and efficiency. This quarter includes certain one-offs, which Devang will cover in his comments.
In the subsidiaries, this quarter, our subsidiaries contributed 30% of consolidated profits, which grew 11% on a year-on-year basis. Jaideep will take you through the details. At an overall level, the consolidated book value per share grew 15% year-on-year to INR 176 on a post-stock split basis. Stepping back, this was another quarter of solid progress against our stated strategy. Kotak is the most comprehensive financial conglomerate. We run the group through the bank and 19 wholly owned subsidiaries. This enables us to create holistic propositions for our chosen customer segments. In addition to this, we run Tractor Finance CV/CE as standalone product verticals. We've identified four focus segments, high-net-worth, Core India, SME, and institutional clients. For the high-net-worth segment, we have the Private Bank and Solitaire propositions.
Our Private Bank has shown consistent good growth in AUMs across MF, NDPMS, AIF, etc. Solitaire, our offering for the affluent, has worked well in growing CASA, SIPs, mutual funds, and driving card spend. In Core India, we have our 811 offering. After the embargo, we are back to acquiring a large number of customers every month. This has also contributed to the savings book growth. Our recently launched 811 Super is attracting the digitally savvy younger customer with a much better ticket size. SME continues to be the backbone of Kotak. The total SME book grew 17% year-over-year to INR 116,000 crore. On the institutional side, investment banking and alternative asset businesses had a very good quarter.
Additionally, we continue to be leaders in Tractor Finance, with a quarterly growth of 5% and year-over-year growth of 16%. On the tech front, we are now further accelerating progress on automation and digitization of Kotak, improving customer service and enhancing efficiency. This covers the entire gamut of the customer life cycle and our various channels across sales offices, branches, call centers, and digital channels. These efforts have allowed us to grow the balance sheet without corresponding headcount growth. We have made significant progress on strengthening technology resilience and recalibrating credit risk.
Our strategy is clear, execution is progressing well, and we are seeing good traction in customer acquisitions, deposit, and asset levels. The above results are a reflection of our continued progress against the execution of our strategy of driving scale for relevance, without diluting our DNA of risk prudence and profitability.
With that, I'll hand it over to Devang to walk you through the numbers in detail.
Thank you, Ashok. Good evening, friends, and wishing you all a Happy New Year. Let me start with the overall bank performance for Q3. If you look at it, this quarter actually saw all-round improvement in net interest income, fee income, as well as credit cost, combined with growth in granular low-cost deposits while maintaining the credit growth. Operating costs saw some one-offs and acquisition-related and volume-related costs. I will speak about that later. The bank's balance sheet grew 15% on a Y-o-Y basis, with net advances growing at 16% Y-o-Y. For advances book, mortgage assets continues its growth trajectory with 18% Y-o-Y growth.
Aggregate SME advances, as you know, we do SME from three separate verticals, which is combined within commercial bank, agri, working capital in consumer, and business loans, in, and SME in wholesale business, all three put together growing at 17% Y-o-Y basis. The bank was able to retain its leadership position in Tractor Finance business with 16% Y-o-Y growth. Absolute unsecured retail loan book growth showed gradual growth, as we had indicated. We remain cautious in growing retail commercial vehicle group while addressing the credit concerns. Coming to the deposit side, I think the total deposits grew 15% on a Y-o-Y, supported by healthy growth in low-cost deposits, as CASA and fixed rate SA, both growing at 15% across customer segments.
Even on average basis, we saw significant granular movement in low-cost deposits, with average CA growing 8% Q-o-Q and average fixed rate SA growing 4% on a Q-o-Q basis. We have obviously also reduced our reliance on the MIBOR-linked SA , which has also helped us in getting a higher cost of fund benefit. CASA ratio at 31st December was at 41.3%. Bank's net worth is at INR 130,000 crore, with a ROE for Q3, 10.68%. Net worth increase in Q3 included about INR 2,000 crore unrealized gain on the valuation of the strategic investment which we hold, which is the MCX and KFin. As you know, we have been accounting this post-tax gains under AFS reserve, and we are not taking it to the profit and loss count.
ROE for Q3 computed on net worth, excluding this cumulative AFS reserves out of the strategic investment, is actually at 11.29%. If we further adjust for the excess equity at 15% for capital adequacy, our ROE is closer to 14%. At the bank standalone level, the capital adequacy is very healthy at 22.6%, of which CET1 itself is 21.5%. Coming to the income statement, bank addressed the quarter with a PAT of INR 3,400 crore. Q3 includes high costs on account of new Labour Code -related provisions, which at the bank's standalone is INR 96 crore pre-tax basis. Adjusting for this, profit actually grew 8% on a quarter-on-quarter basis.
NIM for the quarter remained at 4.5%, which is same as last quarter, despite the 50% repo rate cut in the quarter of June. During quarter three, we also saw a higher short-term liquidity, which was deployed in treasury assets. If we exclude those short-term earning assets, our NIM actually improved to 4.58%, up 4 bps during the quarter. Cost of funds reduced by 16 bps during Q3 at 4.54%, driven by low cost deposits and repricing of maturing term deposits. So if I look at the cost of fund trajectory, it used to be 5.01% in Q1, reduced to 4.7% in Q2, now down to 4.54%. Fee income saw a healthy growth of 6% Q-o-Q, contributed mainly by CapEx, debt capital, and distribution income.
Credit card fee growth continues to remain muted. Employee cost of the bank is INR 2,200 crore for Q3, which includes INR 96 crore, as I, I mentioned earlier, pursuant to the new Labour Code . Further, there was a saving in retirement cost during Q3. Q2, if you recall, which we had mentioned, which has been normalized during Q3. So there is also an effect of Q2 or Q3 movement over Q2 under the retirement cost, which has also impacted the cost. Actual payroll cost without this, which is basically the CTC cost of all the staff, remains flat on a Q-o-Q basis. Other operating expenditure of the bank is INR 2,700 crore for Q3, which is up 5% Q-o-Q basis. However, further analyze that, it includes marketing spend during the festive period on brand promotions.
Further, this quarter saw a significant increase, which is seasonal factor, on the Tractor Finance disbursement. And as you know, there is a higher brokerage we should pay in Tractor Finance, which is accounted upfront, and that also resulted in the acquisition cost going up. There was also an increased acquisition in 811 products, which also increased the volume-related costs. Cost-to-income ratio, without considering the one-off impact of the new Labour Code , is at 47.4%. Asset quality parameter across all the parameters improved significantly during Q3 on expected lines. Gross NPA at 1.3% versus 1.39%, net NPA at 0.31% versus 0.32% last quarter, with a provision coverage ratio now at 76%. Credit cost for Q3 reduced to 63 basis points, down 16 bps Q-o-Q from 79 bps in Q2. As you recall, Q1 credit cost was at 91.
While delinquencies in unsecured retail business showing improvements, we remain cautious on retail commercial vehicle segment. Slippages for Q3 were INR 1,600 crore, which includes INR 257 crore that got upgraded within the same quarter. The slippage ratio, therefore, improved to 1.34% from 1.41% in Q2. Coming to the consolidated performance with respect to group companies, capital market subsidiary showed growth with increased volume and improved market share. Our AMC business, including the Trustee Company , continues to perform well with growth in AUM. Insurance business, which got impacted by GST regulations, changes in Q2, has normalized in the current quarter. Our consolidated customer assets are at INR 598,000 crore, and our AUM managed by the group is now INR 787,000 crore.
Both grew at 15% on a Y-o-Y basis. Q3 26 consolidated profit after tax is INR 4,900 crore, grew 10% from INR 4,400 crore. Q3, profit PAT is after the new Labour Code impact of INR 128 crore. INR 128 crore is the pre-tax, cost at the group level, equivalent to INR 96 crore, what we took it in the bank. ROE at consolidated level is at 11.39%, and ROA for Q3 is 2.10%. The consolidated net worth of the group is now INR 175,000 crore. Our capital adequacy continues to remain strong at group level at 22%--23.3%, with CET1 is 22.4%. The book value of the share is INR 176, which has grown by 15% Y-o-Y, and this, obviously the book value is after considering the split of the shares.
With this, I hand over to Pranav to take you through the highlights of the deposit franchise.
Thank you. Devang is taking you through the numbers. I will now take you through the underlying strategy of the bank deposit franchise. As outlined earlier, our strategy to serve the customer focuses on three levers for growth: consumption-led, investment-led, and asset-led in a cost-effective manner. Customers are now highly digital, expecting real-time, frictionless engagement across every touch point of the bank. We are providing and curating journeys to capture following customer behaviors, which trends across high net worth, mass affluent , and Core India, and that is a billion Indians. Number one, consumption-first mindset. We are leveraging spending patterns to create relevant banking opportunities. Number two, savers to investors. We are tapping into the shift from savers to investor via SIPs, Demat, and trading accounts to build CASA granularly and sustainable growth onto it. Liabilities opportunity from asset.
We are building a banking ecosystem around customers having asset relationship by offering aspirational products. Our propositions are capturing these behaviors and providing enhanced experience to new-to-bank customers, as well as adding value to our existing customers. On current account, our average current account balances grew by 14% Y-o-Y this quarter. Our focus on the self-employed customer base continued to show momentum in a new acquisition, contributing to the overall balances and long-term value creation. In addition, the focus on customer collection and payment flows drove the growth in throughput and liability balances. On savings account, our average fixed rate savings balances grew 12% Y-o-Y. In savings account, our focus continues to be on high net worth, mass affluent, and core customer segments, supported by a comprehensive relationship-led approach that values customer engagement across Kotak's ecosystem, including liabilities, investments, insurance, and loans.
Kotak Solitaire, as spoken by Ashok, that proposition was launched in quarter one and is designed to execute the above-mentioned strategy through quality acquisition, deeper relationships, and sustainable deposit growth. We have observed an uplift in new to affluent customers, with increase in relationship value, primarily driven by deposits and investments, including mutual funds, SIP, and other asset-building products. This trend is visible across both newly acquired and existing customer. Kotak 811, our flagship digital banking proposition, continues to accelerate customer acquisition and digital service at scale with speed and simplicity. It gives Kotak granular, sticky, and low-cost deposit through seamless digital onboarding and app platform. Kotak 811 Super savings account is the first of its banking proposition based on cash flows, not on average monthly balance. It offers 5% cashback on debit card spends. It is specifically designed for Core India customer, young, aspirational, and value-conscious.
Term deposit, we grew by 17% Y-o-Y and 4% Q-on-Q. Distribution. Our distribution strategy continues to deliver omni-banking experience by leveraging physical, digital, and virtual channels. The virtual banking platform bridges branch and digital services with personalized, scalable, 24/7 customer engagement. This approach helps us in enhancing operational efficiencies and effectiveness of remote banking services. Our ability to serve customer at both acquisition and service stages has been improved due to decongestion and digitization of processes across branches and all other channels. Our focus remains on maintaining a balanced mix of savings, current, ActivMoney , and term deposit to drive sustainable growth in liabilities in a cost-effective manner.
I now hand over to Vyomesh to take you through consumer asset business.
Thank you, Pranav. I'll take you through the highlights of the consumer assets. At a macro level, the demand environment of consumer assets remained favorable, supported by stable economic activity and improving customer confidence. Our customer asset portfolio delivered 16% growth year-on-year and 4% growth sequentially, led by strong momentum in MSME segment, reinforcing our strategic focus on balanced, high-quality expansion. Mortgages. Mortgage loans comprising of home loans and loan against property, continued to register a healthy growth of 18% year-on-year and 5% quarter-on-quarter. The home loan market continues to be price sensitive. However, our strategic focus on deepening customer relationship and positioning home loan as an anchor product for the affluent segment continues to drive steady traction. This approach enables us to increase wallet share from existing customer, helping in cross-sell into liabilities, investments, and other core banking products.
The home loan portfolio has demonstrated reasonable growth and remains a key focus area of focus. The loan against property segment, largely serving the MSME customer base, continues to show strong momentum, supported by healthy borrower demand and our disciplined approach to underwriting. We maintain a strong position in this segment, supported by ongoing investment in process improvement, enhanced credit assessment, and an elevated customer service. Overall, the quality of our mortgage book remains sound, enabling us to sustain growth in this particular space. Business banking. There is a sustained demand for working capital across sectors, driven by a surge in consumption trends following the changes in GST. Our secured business banking portfolio, comprising micro and small SME customers, recorded a strong growth of 21% year-on-year and 5% quarter-on-quarter, with utilization levels remaining high, particularly during the festive period.
In the unsecured business loan segment, growth has remained steady with our focus on maintaining portfolio quality. Overall, the business banking portfolio across both secured and unsecured segment continues to be stable. Personal loans. Our organic personal loan business continues to be the main driver of our growth in retail unsecured portfolio. Disbursement have stayed strong, led by salaried customer segment, supported by wider range of digital lending journeys. Credit quality remains stable, helped by better analytics, sharper underwriting, and stronger risk controls. The rapid expansion of digital origination channels is allowing faster decisions, deeper customer reach, and healthy growth in this segment. The personal loan portfolio acquired from Standard Chartered last year is performing better than expected.
Although the rundown of the acquired book has been quicker this quarter, the strong pickup in organic disbursement positions us well for a return to growth in personal loan advances in coming quarters. Our focus on maintaining credit quality remains firm. We'll keep building this business by using data-driven insight, disciplined policies, and digital-first origination to manage risk effectively. Credit cards. Credit cards are key to our core strategy for deeper engagement with our customers, ecosystem stickiness, richer data insight, cross-sell, and better CASA retention to drive improved profitability. Our new Solitaire credit card continues to gain traction in the high-net-worth customer segment. The GST cut and festive season improved customer spends and stronger portfolio engagement. We are seeing consistent improvement in credit quality due to moderating delinquencies, driven by enhanced data analytics, strengthened risk control, and portfolio seasoning.
The analytics-led pre-approved programs, superior risk model, new product launches across customer segment, digital issuances, and targeted ecosystem partnerships will drive scale with quality. In summary, delinquency in overall unsecured portfolio have improved with better flow rates and collection efficiencies observed in this quarter. We continue to enhance our risk management and monitoring framework for all our consumer asset portfolio. We are leveraging analytics, including machine learning models, alternate data in collection to increase collection efficiency and recovery of unsecured portfolio.
I now hand over to Manish to take you through the commercial banking business.
Thank you, Vyomesh . I'll start the highlights of commercial banking, commercial vehicles portfolio. The CV industry saw a sales growth of 22% Y-o-Y and a 21% Q-o-Q growth on account of growth across medium, light, small commercial vehicles. The growth was primarily due to reduction in GST and price hike announced by OEMs, effective first of January. We continue to maintain our overall market position with an appropriate customer segment mix, ranging from fleet operators to retail. As we had mentioned last time, we continue to witness some stress in the retail CV segment, and so over the last few quarters, we have substantially tightened our underwriting and have reduced our disbursements to this segment. We have strengthened our collections accordingly.
The portfolio built over the last few quarters is showing better performance in terms of early delinquency trends, and hence we expect improvement in overall portfolio performance over a period of time. We'll continue to focus on building our business cautiously through calibrated risk interventions, while keeping a close watch on certain customer segments. Construction equipment. The construction equipment industry sales continued to witness negative growth, 14% negative Y-o-Y in Q3, and negative growth of around 10% for YTD December, primarily impacted by slower infrastructure activity, as well as project execution challenges due to early and extended monsoons, disrupting equipment deployment, as well as tight state government cash flows delaying infra execution. Industry-wide, the institutional buyers and mid-sized contractors continue to show resilience, whereas small contractors and first-time users and buyers are navigating a slightly more tightened liquidity phase.
Given this environment, our disbursements were broadly in line with industry trends, and we continue to maintain our strong position in the market. Improved cash flow relieved by state governments, local bodies, municipal corporations, strong and expeditious project award by the government, and higher budgetary CapEx allocation in the upcoming budget will be key for the industry numbers to pick up in the coming quarters. Tractor finance. The tractor industry sales saw 22% Y-o-Y growth and 19% Q-o-Q growth in quarter three, primarily due to GST rate cut, government support on subsidies, and favorable rural sentiment due to good monsoon. Monsoons, extending into early November, as well as soft, agri commodity prices, has had some impact on the cash flows of the farmers. However, robust Rabi sowing, should improve rural cash flows.
Our disbursements grew broadly in line with the industry, helping us maintain our leadership position. Impact of cash flow for the farmers reflected in slightly lower collections efficiency in this quarter, and is likely to recover as rural cash flows improve. Microfinance. The microfinance had started degrowing quarter-on-quarter from quarter two of last financial year. While the disbursements have picked up over the last few months, we expect the industry data to reflect a muted quarter three as well. Our retail micro credit book has remained flat quarter-on-quarter, primarily due to scheduled repayments offsetting the current disbursement rate. The portfolio quality for business origination through our risk profile-based underwriting model is performing quite well. We expect disbursements to gradually improve from this quarter and the portfolio performance to continue to get better in the coming quarters.
We have also started covering our microcredit loan disbursements under CGFMU credit guarantee scheme. Post-merger of BSS and Sonata in October, we are working towards integrating the overall franchise to serve our customers more efficiently across all geographies. Agri business group. The agri SME book saw a Y-o-Y growth of 12% and a quarter-on-quarter growth of 8%, supported by pick-up in working capital utilization and a strong growth in new-to-bank customer acquisition. The quality of book continues to remain good. In this segment, we'll continue to grow our new customer acquisition across agri clusters and focus on providing holistic solutions to these customers through a one Kotak approach, addressing borrowing needs, transaction banking, investment, and protection needs of our customers.
I now hand over to Paritosh to take you through the wholesale banking and institutional business.
Thank you, Manish. I will now take you through the highlights of the wholesale banking and institutional businesses. This quarter, our wholesale banking assets, along with credit substitutes, grew at 17% Y-o-Y and 3% quarter-on-quarter, driven by robust advances growth. The credit substitutes book was, however, flat this quarter, as better loan market pricing led to a shift from investments to loans. We maintained our emphasis on granular growth through the SME and mid-market verticals. In corporate SME, new business momentum remained strong with stable spreads. Existing further migration we did at the start of this year from SME to other verticals of the corporate bank, SME advances grew at 26% Y-o-Y and 7% quarter-on-quarter.
SME remains a core strategy pillar and our ongoing investment in technology projects such as CRM, loan operating system, and digitization of customer journeys are helping reduce turnaround time and improve productivity. Consistent with our focus on building holistic, long-term relationships with customers, we partnered with Indian Institute of Technology to launch programs that enhance further readiness and AI adoption among our SME customers. Our mid-market portfolio, too, continues to scale rapidly. Our book here is diversified, and a substantial portion of the book is from working capital and flow-based businesses. Pricing continues to be a challenge in the larger corporate space, especially in long-term loans and project finance. We continue to focus more on flow-led businesses and profitability through higher cross-sell, greater share of transaction banking, and deeper penetration.
Trade remains a priority. While overall growth in the trade book was muted this quarter due to pricing pressures and large mandates, the granular portfolio showed good momentum, with new client acquisitions and mandates. We also saw good growth in the cross-border trade book in GIFT City . Our recently launched E-Way Go digital platform for supply chain finance is also witnessing a robust pipeline. Our asset quality across customer segments continues to be robust, and we saw minimal slippages this quarter. We continue to enhance returns and profitability through liabilities and fees. There was an uptick in DCM volumes and revenues this quarter, driven by successful completion of large transactions across corporates, real estate, and infrastructure. Asset revenue also grew, aided by both corporate and institutional flows.
We continue to focus on increasing our share of customer collections and payment flows. This quarter, overall number of transactions and throughput have grown well. This was complemented by capital market transactions, including escrows, dividends, buyback, resulting in healthy average liability growth this quarter. Investment in technology, including the launch of a dedicated escrow platform and enhanced API capabilities, have further strengthened our systems. Our unified corporate portal, fyn, is seeing good customer adoption. This quarter, we automated the working capital loan disbursement, dealer financing, and servicing on fyn. The Wholesale Bank continues to work closely with the investment bank and institutional brokerage businesses to improve corporate and investor coverage.
Together, the group is able to maximize opportunities across custody, escrow, FX, financing and primary market activity, and deepen relationships across this franchise. This quarter was an active quarter for these businesses, with several marquee IPOs and advisory deals. In capital markets, the investment bank managed 11 IPOs and 3 QIPs, raising a cumulative of about INR 74,000 crore.
In advisory, the investment bank advised on five transactions with a cumulative deal value of about INR 26,000 crore. The institutional brokerage business also maintained its tier one ranking with most global FIIs for their India investments and with leading domestic mutual funds and insurance companies, and gained volume share in a challenging market. Custody balances in the bank also showed growth this quarter in both the offshore and domestic custody space. We remain focused on onboarding new custody clients, including through GIFT City . Overall, the wholesale banking and institutional businesses remain in good health, delivering acceptable ROE and demonstrating resilience across market cycles.
I now hand over to Jaideep to take you through the subsidiary businesses.
Thank you, Paritosh. Good evening to all. Let me talk about our subsidiaries now. In Q3 FY 2026, our subsidiaries reported profit of INR 1,453 crore, up 11% Y-o-Y and 19% sequentially. This strong performance meant subsidiaries contributed a healthy 30% of consolidated profits for the quarter, underscoring the depth and resilience of our conglomerate model. It enables us to capture shifting financial trends through cycles and retain profitability within the group. Our four engines of growth that enable us to meet customer needs across the financial spectrum are banking and lending, capital markets, asset management, and protection.
Starting with the lending subsidiary, our largest contributor, Kotak Mahindra Prime, our auto finance business, delivered PAT growth of 15% Y-o-Y. Its customer assets grew to INR 43,244 crores with a Y-o-Y growth of 13%. KMIL and KIDF saw muted performance in the quarter, hence the total PAT for lending and related subsidiaries de-grew on a sequential basis, but was up 6% on a Y-o-Y basis.
Turning to the capital market business, last year was an extraordinary period for capital markets, with buoyant volumes driving strong profits in our capital market subsidiaries. The first half of this year was tepid, but Q3 has bounced back with our PAT up 31% sequentially. Given the high base in the previous year, the PAT was down Y-o-Y. In Kotak Securities, our overall market share increased to 13.5% from 11.5% on a Y-o-Y basis. And its market share in the MTF business was about 14% as of December 31, 2025.
As mentioned by Paritosh earlier, our institutional equities business and the investment banking business have had a very healthy round of market share with tier one, with the institutional equities business being a tier one broker for global and domestic institutions, and KMCC acting as investment bankers for high-quality mandates. Turning to the asset management business, Kotak AMC and Trustee Company saw a growth of 31% on a Y-o-Y basis and 22% on a Q-o-Q basis. The total domestic AUM increased by 20% Y-o-Y to an average of INR 586,610 crore as of 31st December 2025. Kotak Alternative Asset Managers Limited is one of the largest domestic alternative asset managers in India, with total funds raised since inception of 11.08 years, of -- $11.08 billion. This quarter, we found successful strategic exits in the portfolio, which is reflected in the profitability.
Moving to the life insurance business, the individual premium earned in grew 18.7% Y-o-Y in Q3 FY 2026. Our retail term assurance recorded a 79% growth in Q3 FY 2026, due to increased focus on the protection segment, aided by GST we provided to customers. The AUMs have crossed INR 100,000 crore for the life insurance business, showing a growth of 14% Y-o-Y. Kotak Life continues to maintain a solvency ratio of 2.3x, as against the regulatory requirement of 1.5x. Q3 FY 2026 is flat on a Y-o-Y basis on account of GST and one-time Labour Code impact.
In conclusion, let me reiterate that our unique strength lies in our breadth. We manufacture every major financial product as a group, with subsidiaries that not only build and distribute through their own channels, but also leverage the bank's distribution strength. Our 100% ownership allow us to retain full alignment and profits within the group and also capture emerging opportunities across financial markets as trends evolve.
I will now request the operator to begin the Q&A session.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to limit their questions to two questions per participant, and please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Kunal Shah from Citigroup. Please go ahead.
Yeah, hi. Thanks for taking the question. So firstly, on the margin part, it was a flat quarter-on-quarter. Last time you had guided that there should be a gradual improvement looking at the deposit repricing and the CRR benefit. So what has actually changed in terms of the expectations with respect to margins? You had indicated maybe some short-term liquidity deployed into treasury, which impacted by odd 4 basis points. But apart from that, anything else which has impacted the margins, which has just led it to be flat, quarter-on-quarter? And what would be the outlook getting into Q4 and next year?
Hi, Kunal. Devang here. You're right. So let's understand what has impacted this before going to the likely scenario next quarter. So, this quarter, of course, the yield got impacted, the floating rate yield got impacted by the fifty basis points cut in the June, of which the effect came in the Q3 as on expected lines. However, this was offset also by partially the CRR rate cut, which happened during Q3, and of course, the repricing of deposits, where we saw the cost of funds reducing from 4.70% to, you know, 4.54%.
As against that, Kunal, as I explained, we also saw a lot of IPO-related short-term funds available in the bank, and that obviously got deployed in the treasury assets, which are typically lower-yielding assets for a short period of time. And that effectively brings down the averages of the funds available and impacts the NIM mathematically. So if I effectively, you know, remove the effect of the short-term funds, which were significantly higher compared to the Q2 on an average basis as well, the NIM improvement is actually 4.5%, as against the average which got arrived at, at a 4.54%.
Now, the second question, how do we see the outlook going forward? I think Q4, we will obviously have the impact of the 0.25% rate cut, which cut on the, you know, in the Q4 floating rate advances as well. However, the repricing of deposits, of course, will continue in the Q4, but at a lower pace. As you can see, actually, the cost of fund decline was 5.01%-4.70%, now to 4.54%. So it has been obviously at a reducing pace, which will go into Q4 as well. However, the CRR cut, which happened during each of the month in Q3, the average of that will have a full quarter impact benefit actually in the Q4.
The last one, as you know, Q4 is a, has a typical aberration, where the February, the lower number of days, while the yield on the advances are at a full month basis of 30 days, the deposits costs comes only for 28 days. This, does bring, some sort of a kicker in the NIM, which is aberration, which gets of course corrected in the, Q1. So assuming no further rate cuts, you know, in February, I think, we will see a moderate increase in Q4 and NIM, as I explained. But I think more realistic and stable NIM is something which will, you know, we'll be able to sort of estimate, going forward from Q1, once the aberrations are also removed and we have a, clearer picture.
We are already seeing some of the tightening in the liquidity and the rates in the term deposits hardening. As against that, we also expect to see some growth in the unsecured business, and let's see how it plays out and impacts before.
Sure, yeah, that helps. The second question is with respect to credit cost. So eventually now we are seeing the specific credit cost coming down to 63 odd basis points. You indicated some stress continuing on the retail CV, but otherwise, are we comfortable on PL, credit card, has MFI also maybe almost picked out and you should see the benefit? And where should we ideally see the credit cost trajectory going forward?
Yes. So the credit cost reduction is on the expected lines, and as I explained, the unsecured businesses, which is the microfinance, credit card and personal loan. If I look at each of them, the microfinance and personal loan credit cost actually has started decreasing, and that's actually the benefit which is sort of you are seeing. A credit card obviously has plateaued, and it's not showing any increasing trend. So the primary reason for the reduction in the credit cost is on account of unsecured business credit cost coming down. On the commercial vehicle, I think we are now saying we are cautiously observing it. We are hopeful that it will plateau down during the Q4, and then we'll see how it operates.
But I think the good news is that the unsecured credit cost is behind us now, and that's what is effectively, you know, resulting in the reduction, what we saw during the quarter.
What should be the steady state credit cost number now, after having achieved 63 basis points? Do we see improvement to 50, 60 basis points over a period, maybe over next, 12 months period?
So, if I just step back, pre-COVID, if I look at my credit cost, where of course my unsecured percentage is also lower, I was hovering around 0.4%-0.45%. As you increase the mix of unsecured credit cost, obviously, credit cost on a standalone basis might show an increase, but I think it also gets you higher returns. So given that the mix of unsecured will gradually go up, you know, it obviously has to be higher than the historical, what we used to have. But clearly, even in Q4, we expect the credit cost to further gradually go down and the trend continuing during Q1.
Thanks. That's helpful, yeah. Thanks. That's all from my side.
Thank you.
Thank you. Our next question comes from the line of Rikin Shah from IIFL Capital. Please go ahead.
Hi, good evening, everyone. I had four questions. So the first one is on CA, and you alluded to some benefit from capital market, but even the average CA balances, even on sequential basis for last two quarters, have been improving. So how much of this would you really be attributing to the capital market, and how should we think of stickiness of this deposits? So that is the first one.
Hi, Rikin. Hi.
Yeah, hi, Rikin, this is Paritosh. See, in our wholesale business, we have a large number of customers who are from financial segment, which is custody, private equity funds, mutual fund, insurance companies, all of them. While there'll be some-- and also capital market, the business gives us deal CA. Some of these things are consistently one or the other. Customer keeps giving us this CA. So even if this is deal CA, this is a regular and consistent deal CA which keeps coming to us from multiple set of customers. So I would say there is a tendency of this business to be more sustainable with some degree of volatility.
I just to add, the current account average growth is not only wholesale deposit. I think the consumer current account also granularly grew, including the, you know, SME business, which also contributed. My reference to the, you know, the IPO and all that was with respect to the short-term deployment in treasury. But I think if I look at purely on a current account average thing, even, you know, it's not only wholesale, but I think the consumer banking also contributed to that, in that. So despite, you know, EOP, if you recall, we had said that Q2 EOP had a lumpy deal-based thing, but, you know, on an average basis also, if you see the current account is showing a growth, both for our consumer as well as wholesale.
Got it. The second one is on the SA deposits. So some of your peers have seen rundowns in the institutional SA deposits. So what is the quantum of such deposits for Kotak? How is it behaving for you and the outlook on the same, please?
Hi, this is Pranav. With respect to institutional, or for that matter, marquee and bulky savings account, we, if you look at, we are more focused towards granularity, and we are also consciously looking on quarter-on-quarter, running down as far as some MIBOR is concerned. So, as far as the fixed rate side is concerned, it is being built with primarily having more of, retail, focus onto it with granularity. And, also, if you look at one of the engines of growth for us is 811 , which is primarily the smaller ticket size, but with lot amount of granularity and an active, participation of the Core India into it. So that's how we have designed our strategy to take care of whether high-net-worth individuals are concerned or for that matter, mass affluent, and then the Core India.
That's where it is building on as far as more granularity than a bulkiness onto it towards institutions.
Got it. The third one is on the total cost of deposit. How would that number look like? Would it be broadly 4.45%? And, how much of term deposit repricing do you think is still remaining? So that's the third one.
Look, I think, we have indicated the, average cost of the savings account, which is already there in that. I think the term deposit rates obviously, have sort of reduced over quarter-on-quarter. But, I think as I indicated, going into Q4, clearly there is some tightening and hardening of the rate, which may take place. In terms of the, residual, sort of repricing explaining the cost. If I look at the cost of, fund benefit itself, which used to be about 32 basis points in Q1, reduced to 16 basis points, in Q2, and now it is 8, around 16 basis points in Q2, is further, obviously, as the repricing, starts completing, it will further go down.
Clearly, with the average deposit, which is between 9 to 12 months, and if you look at roughly, the repricing started towards middle of Q1, we expect the repricing to get completed by Q1 of the next year.
Got it. Perfect. The last question is on the agri PSL. Some of the peers have had some regulatory supervisory observations. Would you be able to comment whether the same audit has been done or any broader color for your book as well?
Yeah. So look, it's not possible for us to comment on other banks. I just don't know. As far as we are concerned, we have not taken any provision. Also, you know, as far as the RBI audit is concerned, that is something that we are required to keep confidential, so I can't discuss the findings of anything from the RBI audit. But suffice to say that we have not taken--a s you would have seen, we have not taken any provision in this quarter.
Got it. Thank you, gentlemen, for answering all the questions. Good evening.
Thank you.
Thank you. Our next question is from the line of Abhishek Murarka from HSBC. Please go ahead.
Yeah. Hi, good evening. So my first question is on loan growth, and specifically, just coming to credit cards. This quarter, we've seen, at least in the RBI data that came out, that a lot of other smaller banks have started increasing their card issuances. What seems to be holding you back, in terms of card issuances and spend pickup?
So, frankly, Abhishek, like we've been talking about, we've completely revamped our credit card proposition. We've launched a whole range of new products, right from Solitaire to the top end, or the top end, to Air + and Air, which is a cash pile product for the mass affluent, and then a cashback product. This whole range of products are going out and, you know, you will start seeing growth in spend and Air. Having said that, look, we want to be cautious. We obviously don't want to grow very aggressively and then get into credit problems. And as you would have seen, Q3, generally speaking, has been a very muted quarter for credit cards across the industry.
So we'll see, in the first instance, we will see spend on the cards go up as we ramp up acquisitions, and then we will see ANR build over a period of time. The newly launched products, particularly Solitaire, is doing very well, and we are very, very hopeful that those numbers will start showing up very quickly.
So it's probably more a matter of time that all these steps that you have taken, they'll start building up, and we, we start seeing some traction maybe one or two quarters down the line in this portfolio?
That is correct.
Understood. And, as far as OpEx is concerned, so, one of the things is that, you know, the marketing spend and the acquisition cost, that will also continue to go up, as, you know, PL, cards, et cetera, all of these scale up. So just from a cost growth perspective, what kind of, say, medium-term growth should we look at as a sustainable run rate? Because right now, a lot of it is impacted by, you know, last year's, slowdown in several segments. But, going forward, we are looking at more traction. So how, how would the cost growth pan out?
So Abhishek, think about it this way, that, you know, we want cost to go up when, you know, when we are acquiring new customers in 811 , in Affluent, new cards, new tractor loans, and stuff like that. Those costs, frankly, are good costs, and let them, kind of go up. That will be offset by a lot of our effort in, automation and digitization, where we are trying very hard and working feverishly to, improve efficiencies and our customer experience. And obviously, as we kind of grow the acquisitions and grow, you know, the marketing costs and things like that, we will see income go up as well.
I don't think we can really talk about a kind of, you know, guidance on either cost-income ratios and stuff like that, but effectively, that is what we are trying to drive. Anything you would add, Devang?
Yeah, just to build up on that, you know, just one data point, you know, while Ashok rightly mentioned, the acquisition costs are obviously volume related, which we obviously want to grow with our philosophy of growth for scale. But I think, if I look at the fixed costs and let's say the CTC, which is the payroll cost of the staff, which is effectively around 60%-65% of the total cost, between Q3, Q2, it has remained flat. So while we are spending on acquisition, new businesses, I think the fixed cost is where we are clearly controlling. And, you know, some of the investments in technology, which we have been continuing, is now sort of helping us to, you know, rationalize some of those things.
Yeah.
No, absolutely. I don't look at costs as any negative item as such. It is a necessity for growth and revenue generation
Sure.
Of course. So, but just as a thought process, if you're expecting a, let's say, mid-teen, high-teen, whatever, loan growth, costs would lag it substantially by 3, 4 percentage points, or you could see, you know, more operating leverage as in cost being, cost growth being much slower than loan growth. So just how do we think about these two, and, you know, then that can give a sense of the ROEs going forward. So I'm just trying to get some understanding there.
Over a period of time, Abhishek, over a period of time, not quarter by quarter by quarter. But on a trend basis, we should see cost to assets coming down, and we've started to see that trend, and we are hopeful that that trend will accelerate.
Actually, if you also look at cost to asset ratios, you know, if you look at, as Ashok rightly said, over a longer period of time, if I look at from last year over this quarters, and this quarter, as, as I said, you have some aberrations. Actually, it has come down. It used to be above 3%, which is now down to around 2.7% and 2.5% sort of range, right? So it is always, coming down as a--t hat's a good way to look at as a indication, as a cost to the asset build-up, basically. I think it's already gone this way. Certainly we would like to further improve that as we go along, right?
Yeah, no, exactly. So that is where my question was from, because cost to asset has come down in a period when some of your assets which require more spends, they have not grown. And now when they grow, does cost to asset go back to 3%, or from here you continue to see, you know, steady reduction in cost to asset? So just that understanding, that's it.
Well, I think, we would like to obviously, maintain and, you know, a cost to asset ratio in the range of 2.5%-2.6%, right?
Okay. All right. Thank you. Thanks a lot, and all the best.
Thank you. Ladies and gentlemen, you are requested to please restrict yourselves to two questions only. Our next question is from the line of Mahrukh Adajania from Nuvama. Please go ahead.
Yeah, hi, good evening. My first question is on ECL. So based on the draft, what will be the likely impact on credit costs for you from ECL? And my other questions are that you did mention, or you did allude to some rundown in the PL portfolio purchase from Standard Chartered. So could you quantify or throw some light on it? And I just also wanted to know if you could quantify the proportion of liabilities which are yet to reprice? I n the fourth and first quarters from the--
Hi.
Yeah, hi. Hi.
Okay, on the ECL part, as you know, it is still a draft circular, which RBI has come up, and all the banks, including us, we have obviously represented, because it requires you to make a floor-based provisioning by asset segment. However, considering even the draft circular, the impact of the ECL provision is less than 2%, post tax, for us in the bank, so it's not likely to materially impact, even if we were to apply the draft circular as is. So that's the first point.
2% of what?
On the Standard Chartered-- Sorry?
2% of what?
2% of the network. Network.
Okay.
Yeah. And as you know, we already, we have significantly higher net worth than required, so we don't see any significant impact arising out of that. And even in fact, the circular also provides for amortizing that over four years and all that. But we'll see how the final draft circular comes. But I think it is suffice to say, it is not a significant impact at all, even if you were to go as per the as is circular. Coming to the Standard Chartered portfolio, which is there now, I think the residual portion, which remains, is not very significant. It's less than sort of INR 1,500 crore, approximately, and about 20% of what it was. So I think it will run down over the next two quarters in that sense.
The third portion, what you said, is on the repricing, which is left, which I partially answered earlier. As I had mentioned, the term deposit, average maturity, is about 9-12 months, and we expect, the repricing to effectively, complete, during the Q1, in that sense. And that anyway, if you see the trend of cost of fund reduction, it reflects actually the repricing's pace of the term deposit. So that's how I look at it going forward.
Okay, thank you very much. Thank you.
Thank you. Our next question comes from the line of Piran Engineer from CLSA . Please go ahead.
Yeah, hi, team. Congratulations on the quarter and also on hiring Mr. Saha. Just firstly, getting back to the current account thing, our growth for the last two quarters was good. Last quarter was even better at 8%. Is all the pickup in growth due to the capital markets business, or some structural changes we've made due to which current account growth is picking up?
Hi, Piran . Our current account is primarily, if you look at, there's large amount of activity around the granularity in the market also, and we've been able to capitalize on in terms of the opportunity which is being thrown out there in the market, as far as acquisition of more of what you called as private label companies, proprietary and things like that. So our growth primarily, and that's where you'll find an AMB growth commensurate with the fact that these are granular current account franchisee getting created.
I'll just add, in addition to that, our focus on building CMS capabilities and offering more, cash management services to our corporate customers, which not only help us get better CA, also effectively helps improve productivity both at bank and as well as the customer end. So that's together, between consumer bank and the Wholesale Bank , helping us improve the CA.
But I think, see, this was also true a year back, right? Year, year and a half back. But our growth was still weak then, and we were catering to the SMEs. We had the consumer banking product, cross-selling current accounts to them. But this year we've seen, you know, current account deposit growth really accelerate. So just trying to understand, maybe this happened by chance, but, have there been any specific steps we've taken, was my question.
Trust me, trust me, it hasn't happened by chance. It's been a lot of effort and a lot of focus of the sales teams. And you know, Pranav has driven a lot of this through the branch network. We've been very focused on getting the affluent customer base. The level of changes that we've driven through our branch network, both in terms of process, focus, building out branches based on persona of catchment areas, making the whole acquisition, making the whole acquisition process far more efficient, all of that, plus all the automation and digitization to help customers with their payment flows, has all resulted in this. So trust me, it's been a tremendous amount of effort and focus on this area, which has led to this kind of performance.
Got it. Okay, that, that helps. Secondly, just on your agri finance book, now, last couple of years, it's been unchanged at INR 25,000 crore, and this is different from the tractor book. So can you just talk a bit about what loans are there here and why you're not growing them? And I'm presuming these are, better yielding than the rest of the book.
So this is primarily the agri SME value chain, which is what we cover here. So this is not the KCC book. This is primarily the agri SME value chain business, which is what we are; we have kind of pivoted around, building around the various agri clusters across the geography. And that is something which we kind of pivoted as a strategy over the last couple of years in terms of driving it. And that is what is yielding results in terms of numbers that you are seeing. Slowly, the numbers have been inching up on our last three quarters, when you see the numbers.
Okay, so these are like two, what, a food processing units or storage units or stuff like that?
Yes. Agri traders, agri processors, primary processors, secondary processors, all of that falls within this particular segment.
Got it. Okay, and then just lastly, a couple of clarifications I needed. Devang, when you say the CTC is flat, but even if I adjust for the Labour Code , the employee OpEx is up 9%. So what am I missing here? And secondly, what is the mix of LAP in the mortgage book?
So, I also mentioned that, if you see the pension liability, last time I had mentioned we had a benefit because of the interest rate movement, which has effectively reversed out and normalized during the quarter. So that is the first part. Second, I think some of the share-based incentive, which are like SAR, obviously has, the provisions has gone up, because of the share price movement, which has impacted those provisions.
Got it, got it. Just on the LAP percentage of the mortgage book?
LAP and, well, sort of, I guess, I think it should be around almost equal, 55%-65% sort of thing, basically.
Got it. Okay, that's useful. Thanks, and wish you all the best.
Thank you.
Thank you. Ladies and gentlemen, you are requested to please restrict yourselves to one question only. Our next question comes from the line of Suraj Das, from Sundaram Mutual Fund. Please go ahead.
Yeah. Hi. Thanks for the opportunity. I think few question have already been answered. Just a follow-up, and two questions total. First one, on the credit card follow-up. Sir, while, I mean, as you have mentioned that your Solitaire card seems to be performing well, but I guess, last time you had earlier slowed down the card acquisition through 811 channel for the mass customer segment. Has that funnel been reopened? That is one. And then also, I mean, in terms of the Solitaire card, it is a super premium card, right? So, is it a ROE accretive product? Related to credit card, also one question. In terms of this proportion of personal loans and credit cards, what could be that proportion in terms of this overall personal loan book of INR 25,000 crore? So that is question one.
Question two, sir, is on strategy, a bit. In terms of, say, the bank's leadership bandwidth in the consumer vertical has been further strengthened. In that context, do you have any plans, say, to expand or rejig the Consumer Bank 's product portfolio? I mean, are there any products which are probably not key focus areas or maybe growth drivers today, or maybe you are not offering currently, but you see becoming incremental growth drivers over time? And the last question, sir, in terms of this IDBI deal, what could be your comments, since now government has finally invited bids?
Yeah. So let's start with cards, right? So Solitaire is targeted towards the affluent. Solitaire has landed well. The spend on the Solitaire card is proving to be very accretive for us. While it is still early days to see how it kind of builds up, I believe that Solitaire will be a profitable product in its own right, given the levels of spend that we're getting on Solitaire. Your other question around 811. You know, at one point in time, we had done a lot of experiments with the 811 kind of customer base, and those experiments did not entirely work out well for us. It's not as if we are not selling Solitaire.
Card products to the 811 base, but we're doing it in a much more refined, kind of way, using advanced risk models and capping exposure just to make sure that we're getting it right. So, that will kind of continue. We will come back on cards and kind of grow the book. IDBI. Look, we look at every single transaction that comes up in the marketplace, you know, and we essentially have three criteria that we look at. The first criterion we look at is, is this particular transaction going to add to us strategically, right? If the transaction adds to us strategically, then of course, we go to the next stage. If it doesn't add strategically, it kind of goes away.
Then we look at valuation and say, "You know, what is the valuation on this particular transaction, and is it value accretive, for the firm?" I've said time and time again, that for us, scale, is scale for relevance and not just scale for size. So does it really add strategically, and will it add to-- will it be accretive, to the group? I f it is both financially, both, strategically and financially good, then of course, we get excited about the transaction. But even then, there is a third lens that we put to it, and the third lens that we put to it is really the lens of saying: what is it going to take to really integrate this kind of acquisition, right? We are on a pretty significant transformation path.
Our transformation path is about getting far more customer-centric. It's about automating and digitizing, Kotak, to take it to a completely different level. There's a lot of effort that we're pushing into, driving those efficiencies within the system, because those will be clearly longer-term, significant benefits for Kotak. Even if it meets strategically or if it meets valuation, then we always compare, what does it really mean in terms of integration? How much management bandwidth is it going to be? How much of that will be a distraction? What are the kinds of things that you really want to spend your time on?
You want to spend your time on developing new technologies, getting into the AI game, making customer satisfaction a big, big priority, or do you want to spend your time integrating HR systems, dealing with labor unions, and all of that kind of good stuff? Therefore, we look at every single opportunity against these three lenses, right? Whichever opportunity comes up, we will continue to look at it against these three lenses, and then weigh up whether it makes sense for us or does not make sense for us.
Sure, sir. Sir, that, those two questions are on the strategy on the Consumer Bank and the PL on cards.
Yeah. On the Consumer Bank , no, look, our stated strategy, our stated strategy is all about identifying focus segments and going aggressively after focus segments to get disproportionate market share, right? We've launched a solitaire proposition. We've got a great proposition in the Private Bank . For India, we've got a great proposition in 811 . Now, these propositions, once we land the proposition, it's not as if we are going to just keep quiet, right? We want to continue to enhance these propositions so that we get a greater deal of customer engagement and a higher level of acquisition. So that is going to be an ongoing ongoing effort as far as we are concerned, right? And we constantly, we are constantly monitoring what our customers are saying, what do they really want, and how can we serve these customer segments better.
Based on the feedback that we are getting, based on the conversations, we will improve the propositions that we have in the marketplace.
Sure, sir. And any quantum, if you can, highlight on the PL on cards portion and the overall personal loan?
So we have a pretty much separate product in PL, and therefore, PL on card, frankly, is, to my mind, is not such a great product because it clogs up the credit limit, and therefore, for us, that is not a very significant proportion of the credit card book.
Got it, sir. Thank you for answering all my questions.
Thank you. Our next participant--o ur next questioner is Jai Mundhra from ICICI Securities. Please go ahead.
Hi. Good evening, sir, thanks for the opportunity. So on slippages, right? So the absolute slippages are stable Q-o-Q. You have been mentioning that the bank has been experiencing improving trajectory on personal loan, credit card, MFI, and those are supposedly high delinquent product. So if they are improving, then, you know, which is the piece which is rising and hence the overall slippages are stable? That is the-- If you can provide some clarity there. Apart from the retail CV, which anyway is a very small proportion, I believe.
Hi, Jai. So if you look at the slippages data, you know, you are right that if you compare just the slippage data, say, INR 1,629 crore going to INR 1,605 crore , doesn't make a significant reduction. But I think I would urge you to look at the fresh slippages upgraded within the same quarter. So if you look at, because number, you know, during this quarter is INR 257 crore . So effectively, while INR 1,605 crore is a gross slippage which we entered during quarter, of which INR 257 crore actually also got cured during the quarter. If I look at the similar number in the last quarter, it is INR 1,695 crore . So if I consider the upgraded portion also as a part of the slippage, actually it has come down by about INR 100 crore on a quarter-on-quarter basis. So that's the first part.
Second piece, I think, yes, slippages are combination, but I think, in terms of the unsecured businesses, they are indeed coming down. But I think it's the commercial vehicle and some of the rural related advances and CV, commercial retail, which is effectively sort of bringing it down within the quarter.
Sure, sir. Lastly, on One Kotak, right? We have been, as you have been saying that we are a uniquely positioned financial conglomerate. But if I look at the core fee income, despite, you know, industry-leading loan growth and deposit growth, the fee income growth, core fee income growth has been much weaker, or much smaller than the loan growth and even in absolute basis, despite all this, you know, conglomerate strategy. Is there anything which is. I mean, when can we expect the core fee income going more or less similar in terms of business growth? Or so far, was there any obstacle? Thank you.
Two things, Jay. One, obviously, the fee income consists of a combination of a whole host of things, starting from foreign exchange income to DCM income, to life insurance distribution income, to mutual fund distribution income, and other such products as well. If you look at the fee income growth on a Q-o- Q basis, you've started seeing green shoots with a 6% growth on a quarter-over-quarter basis. Now, as I said, that this is something which has been charted, we've been talking about for maybe about two or three quarters now, and it's not immediate that you will see the results, but a 6% quarter-over-quarter number is, I would say, a beginning, and we'd just like to keep growing on that, hopefully on a quarter-over-quarter basis.
I think it's beyond the fee line also, right? I mean, look, there's no question about, you know, getting referrals for, referrals for, assets. And it's also not only just from the subs to the bank, it's also for, not only bank to the subs, subs to the bank, but also bank to the subs. So I think we've got to look at it on a little more holistic basis.
Right. Thanks. And I think, sir, you, if you could repeat what you said in response to the, you know, that we have strengthened the consumer banking, management bandwidth. Any products that you would like to sort of, rehash or reintroduce or introduce or scale up, over the few, over the next few quarters years? Thank you.
Yeah. So what I said was that, look, ultimately, we have-- It's not so much about doing a particular product, it's more about the propositions that we've landed for our various customer bases, right? And strengthening the proposition. So we land the proposition with a certain set of products and services, and then we are in constant, you know, we are constantly monitoring what customers say about those, about that proposition. And based on the feedback, we continuously strengthen the proposition so that it becomes more meaningful, and more engaging, for our customers, and we will continue to do that. There will be things that will land, which will have resonated with customers, and then there'll be other things which may have not resonated, or there'll be feedback, and we will twist and adjust the propositions to take care of those things.
Sure, sir. That helps a lot. Thank you, and all the very best.
Thank you.
Thank you. Our next question is from the line of Chintan from Autonomous. Please go ahead.
Thank you for taking my questions. I'll restrict myself to one question. Devang, you mentioned that rates are tightening and competitive dynamics might not be as good in the fourth quarter. Do you not think the RBI measures will help there? Or is the tightening, you know, for you strong enough that we should be a little wary of how the dynamics play out in the fourth quarter?
I think, Chintan, hi. My comment was also based on the initial liquidity in the system data, which is, we are seeing. Of course, you are right, some of the measures have been taken by RBI currently. But typically, Chintan, if you see, Q4 is a very quarter where, for the corporates as well as for the bank, where, the liquidity does tighten up in that sense. So it was more based on what we saw for the first 10 days of January. Of course, if RBI takes measures, and to ease it out, it will, sort of reflect in that. But, till date, at least we have seen, since the term deposits, actually the rates, if you see, even if you see the term deposit rates quoted by the peer banks, across the buckets, have actually inched up. So my comment was based on that experience, actually.
Now, of course, with these measures tightening, who knows, whether they will sort of further, bring it down? But, let's see about that, yeah.
Okay. And just a request for the next quarter, just for a couple of quarters, if you could give us yield on advances and cost of deposits, just as this repricing completes. You know, I know you don't want to get into that granularity, but it'll help for a few quarters. Thank you.
Yeah, we'll consider your request.
Thank you.
Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to Mr. Ashok Vaswani for closing comments. Over to you, sir.
So, thank you so much. Thanks, everybody, for joining us. Much appreciate doing this on a Saturday evening, and I look forward to seeing you all again in approximately 90 days. Thank you so much. Bye-bye.
Bye.
Thank you. On behalf of Kotak Mahindra Bank, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.