Kotak Mahindra Bank reported a better-than-expected 26% increase in fourth-quarter net profit on Saturday, buoyed by higher core lending income and healthy loan growth.

The private lender's standalone net profit, excluding subsidiaries, rose to ₹4,133 crore ($495.71 million) in the January-March quarter, from ₹3,496 crore in the same period last year.

Kotak's net interest income, the difference between interest earned and paid out, increased 21% on-year to ₹26.000 crore . Its net interest margin (NIM), a key gauge of profitability for banks, shrunk to 5.28% from 5.75% in the year-earlier period but was higher than the 5.22% reported in the October-December quarter. Indian lenders' margins have come under pressure over the last few quarters as deposit costs have risen amid tight banking system liquidity and as loan growth momentum stays strong.

Kotak's loans grew 20% from last year, while deposits rose 19%. Its gross non-performing assets (NPA) ratio was at 1.39% at the end of March, versus 1.73% at the end of December.

Kotak's provisions and contingencies, net of recoveries made against bad loans, were ₹264 crore, compared with ₹148 crore a year ago. These included provisions made for alternate investment funds, the bank said.

Last week, the Reserve Bank of India (RBI) barred Kotak Mahindra Bank from taking on new customers through its online and mobile banking channels and issuing fresh credit cards due to information technology-related deficiencies.

A key official of the bank also resigned earlier this week, sending the bank’s shares lower.