Why KMB shares tanked 4% after Q1 update; how Axis, HDFC Bank, PNB, BoB, RBL Bank react

Kotak Mahindra Bank Ltd (KMB) saw its shares tumbling 4 per cent following its June quarter business update. HDFC Bank Ltd, Axis Bank Ltd, State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB) and RBL Bank Ltd are among other lenders that reacted to their Q1 updates today.

Net-net, as Ashik Institutional Equities said, public sector banks marginally outpaced private peers on credit growth while private lenders maintained their lead on deposit mobilisation. A higher Credit-Deposit ratios and continued moderation in CASA deposits indicated continued funding-side pressures for private banks. 

Kotak Mahindra Bank reported a relatively moderate credit growth of 15 per cent, Ashika Institutional Research said in a note. It called Kotak's 11.7 per cent deposit growth in Q1 as subdued. The scrip fell 3.95 per cent to hit a low of Rs 381 apiece. 

HDFC Bank Ltd gained 3 per cent to Rs 825.10 apiece. HDFC Bank's advances grew 15.4 per cent YoY and deposits by 14.7 per cent. Axis Bank Ltd rose 0.74 per cent to Rs 1,352.45 apiece. This lender reported gross advances growth of 18.8 per cent YoY and deposits growth of 18.1-18.2 per cent YoY. 

"Within large banks, Axis Bank reported relatively balanced growth while HDFC Bank maintained healthy momentum. We believe that the ability to sustain deposit mobilization, protect CASA franchises, and manage incremental cost of funds will remain key differentiators as banks focus on sustaining credit growth momentum throughout FY27," Ashika said.

Ashika said trend was subdued for IndusInd Bank (up 4.5 per cent YoY). Among PSBs, Bank of Baroda’s deposits grew 13.8 per cent YoY while PNB delivered a weaker 8.5 per cent YoY deposit growth, Ashika said adding that based on implied growth trends for banks that do not report provisional business numbers, they appear to have trailed the system average growth.

"We believe that the ability to sustain deposit mobilization, protect CASA franchises, and manage incremental cost of funds will remain key differentiators as banks focus on sustaining credit growth momentum throughout FY27," Ashika said.

RBL Bank Ltd shares edged 0.18 per cent higher at Rs 361.75. PNB fell 0.5 per cent to Rs 104.81. BOB shares declined 0.6 per cent to Rs 250.60. Bank of Baroda’s deposits grew 13.8 per cent YoY while PNB delivered a weaker 8.5 per cent YoY deposit growth.