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Kotak's low payout drags RoE
Mint Bangalore
|October 28, 2025
Kotak Mahindra Bank Ltd's customer assets rose 13% year-on-year to ₹5.09 trillion in the September quarter (Q2FY26).
Yet, its common equity tier (CET)-I ratio remains a hefty 20.9%, only marginally lower than 21.5% in Q2FY25. CET-I, which includes core equity capital and retained earnings, is higher than that of ICICI Bank Ltd (15%) and HDFC Bank Ltd (17%). This excess capital is a key reason Kotak’s return on average equity (RoAE) lags peers—at 10.4% versus a minimum of 14% for HDFC Bank, ICICI Bank, and State Bank of India Ltd (SBI).
During the earnings call, Kotak Mahindra Bank CEO Ashok Vaswani pointed out that Indian banks are not allowed to do buybacks under the Reserve Bank of India's (RBI) rules— an avenue that could have improved RoAE.
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