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Karnataka Bank recorded 56% dip in the net profit to Rs 27.31 crore in the quarter ended March 2020 (Q4FY2020), driven by surge in provisions. Meanwhile, bank has improved asset quality in Q4FY2020 with the decline in fresh slippages of loans. Bank has maintained stable margins with healthy improvement in the CASA ratio at end March 2020. However, the business growth of the bank has moderated, while the share of retail loans has eased on sequential basis to 45.5% at end March 2020.
Asset quality improves: Bank has improved asset quality in the quarter ended March 2020 with the dip in fresh slippages of advances.
* Fresh slippages of advances eased to Rs 304 crore in Q4FY2020 from Rs 638 crore in the previous quarter
* Meanwhile, the recoveries, upgradations and write-off stood at Rs 285 crore for the quarter.
* Outstanding standard restructured advances of the bank rose to Rs 414.00 crore (0.73% of advances) at end March 2020 compared to Rs 393.00 crore (0.72% of advances) at end December 2019.
* Stressed assets (NNPA and restructured advances) declined to 3.81% of advances at end March 2020 from 4.46% at end December 2019 and 3.49% at end March 2019.
| Asset Quality Indicators: Karnataka Bank |
|
Mar-20 |
Dec-19 |
Sep-19 |
Jun-19 |
Mar-19 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
2799.93 |
2777.46 |
2594.27 |
2437.53 |
2456.38 |
1 |
14 |
| Net NPA (Rs Crore) |
1755.01 |
2058.04 |
1863.11 |
1759.77 |
1616.71 |
-15 |
9 |
| % Gross NPA |
4.82 |
4.99 |
4.78 |
4.55 |
4.41 |
-17 |
41 |
| % Net NPA |
3.08 |
3.75 |
3.48 |
3.33 |
2.95 |
-67 |
13 |
| % Provision Coverage Ratio |
64.70 |
59.34 |
59.19 |
58.08 |
58.45 |
536 |
625 |
| % CRAR - Basel III |
12.66 |
12.40 |
12.64 |
12.70 |
13.17 |
26 |
-51 |
| % CRAR - Basel III - Tier I |
10.66 |
10.40 |
10.64 |
10.70 |
11.17 |
26 |
-51 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Performance:
Business growth eases: Business of the bank rose at moderated pace of 4% yoy to Rs 128749 crore at end March 2020. Deposits increased 5% to Rs 71785 crore, while advances moved up 4% to Rs 56964 crore at end March 2020. Credit-deposit ratio rose to 79.4% at end March 2020 from 77.0% at end December 2019.
CASA ratio improves: CASA deposits increased 8% to Rs 20752 crore. CASA ratio improved to 28.9% at end March 2020, compared with 27.4% at end December 2019 and 28.1% at end March 2019. Meanwhile, bank has sharply reduced bulk deposits by 95% yoy to mere Rs 54 crore at end March 2020.
Retail loans driving advances growth: Advances rose 4% at Rs 56964 crore at end March 2020. The corporate advance declined 1% to Rs 31051 crore, while the retail advance galloped 10% to Rs 25913 crore at end March 2020.
* Retail advances gained share to 45.5% at end March 2020 from 42.9% at end March 2019.
* Break-up of advances shows housing at 15.8% of the advances, agriculture - 11.5% , SME - 18.3% , medium enterprises - 2.9% , large enterprises - 13.2% , other personal loans - 5.6% and other - 5.6% at end March 2020.
* Priority sector loans (PSL) of the bank stood at 43.8% of advances at end March 2020, while consistently exceeding the regulatory PSL target of 40%, while eased from 44.6% a quarter ago and 44.2% a year ago.
Investment book of the bank increased 8% to Rs 17545 crore at end March 2020. Share of AFS book increased to 19.4% at end March 2020 from 25.4% a quarter ago and 20.8% a year ago. The modified duration of AFS book increased to 2.60 years, while that of overall investment book moved up to 4.98 years at end March 2020.
Network expansion: Bank has opened 3 branches in the quarter ended March 2020. Bank has the network of 848 branches and 1026 ATMs at end March 2020.
Book value stood at Rs 192.04 per share at end March 2020. Adjusted Book value (excluding NNPA and 10% of restructured assets) was at Rs 134.25 per share at end March 2020.
Quarterly Performance
NII growth up on stable margins: For the quarter ended March 2020, the bank has posted 7% growth in interest income to Rs 1639.21 crore, while interest expenses increased 6% to Rs 1109.91 crore. NII rose 10% to Rs 529.30 core in Q4FY2020.
Non-interest income growth improves: The non-interest income of the bank increased 52% to Rs 440.37 crore in Q4FY2020. The core fee income of the bank increased 15% to Rs 285 crore, while trading income surged 260% to Rs 155 crore in Q4FY2020 over Q4FY2019. Net Total income rose 26% to Rs 969.67 crore in quarter under review.
Expense ratio rises: Operating expenses increased 29% to Rs 578.13 crore. The employee cost jumped 82% to Rs 370.44 crore in Q4FY2020, while the other operating expenses declined 15% to Rs 207.69 crore. Expense ratio was nearly steady at 59.6% in Q4FY2020 compared with 58.0% in Q4FY2019.
The operating profit increased 21% to Rs 391.54 crore in the quarter ended March 2020.
Provisions jump: Bank has witnessed surge in provisions and contingencies to Rs 356.50 crore in Q4FY2020 as against Rs 217.73 crore in the corresponding quarter last year.
Thus, the Profit before tax (PBT) dipped 67% to Rs 35.04 crore in Q4FY2020 over Q4FY2019.
Tax provision dips: Banks tax provisions stood at Rs 7.73 crore in Q4FY2020 against Rs 44.77 crore in Q4FY2019.
Net profit declined 56% to Rs 27.31 crore in Q4FY2020.
Financial Performance FY2020
For the year ended March 2020 (FY2020), the bank has posted 10% decline in net profit to Rs 431.78 crore. The net interest income improved 7% to Rs 2030.36 crore, while non-interest income jumped 39% to Rs 1396.05 crore in FY2020. The expense ratio moved up by 152 bps to 51.6% in FY2020 compared to 50.1% in FY2019. The operating expenses increased 21% to Rs 1769.64 crore, while provision and contingencies moved up 35% to Rs 1134.74 crore. The profit before tax declined 14% to Rs 522.03 crore in FY2020. After considering 17% of effective tax rate, the net profit fell 10% to Rs 431.78 crore in FY2020.
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