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Karnataka Bank has reported 225% growth
in net profit at Rs 370.70 crore for the quarter ended June 2023 (Q1FY2024). The
bank has posted healthy 18% growth in net interest income (NII), while the core
fee income of the bank has declined 6% in Q1FY2024. The Net Interest Margin
(NIM) of the bank improved to 3.68% in Q1FY2024 compared to 3.33% in the
corresponding quarter of previous year.
On business front, the bank as has posted 7% growth
in business with strong 5% rise in loan book. The asset quality of the bank was
stable in Q1FY2024. Bank has substantially improved the credit to deposit ratio
to 70.7% at end June 2023 from 72.4% at end June 2022. However, the CASA ratio
of the bank has declined to 32.2% at end June 2023 from 32.8% at end June 2022.
Asset quality improves: The bank has continued to improve asset quality
in Q1FY2024.
The fresh slippages of loans stood at Rs 292 crore
in Q1FY2024 compared with 587 crore in previous quarter and Rs 569 crore in the
corresponding quarter last year.
The recoveries of NPAs stood at Rs 167 crore,
upgradations at Rs 90 crore and the write-off of loans was at Rs 12 crore in
Q1FY2024.
The standard restructured loan book of the bank
stood at Rs 2268 crore end June 2023 compared to Rs 2306 crore a quarter ago.
Provision coverage ratio improved to 83.47% at
end June 2023 compared to 80.86% a quarter ago and 76.77% a year ago.
The capital adequacy ratio of the bank stood at 17.0%
with Tier I ratio at 13.8% at end June 2023.
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Asset Quality
Indicators: Karnataka Bank
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Jun-23
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Mar-23
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Dec-22
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Sep-22
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Jun-22
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Variation
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QoQ
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YoY
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Gross NPA (Rs Crore)
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2315.88
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2292.91
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2085.73
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2051.70
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2401.39
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1
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-4
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Net NPA (Rs Crore)
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877.71
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1021.27
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1040.88
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1028.47
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1262.88
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-14
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-30
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% Gross NPA
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3.68
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3.74
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3.28
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3.36
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4.03
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-6
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-35
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% Net NPA
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1.43
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1.70
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1.66
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1.72
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2.16
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-27
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-73
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% PCR
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83.47
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80.86
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80.21
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79.97
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76.77
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261
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670
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% CRAR - Basel III
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17.00
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17.45
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15.13
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15.28
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15.41
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-45
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159
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% CRAR - Tier I -
Basel III
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13.80
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14.18
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12.20
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12.34
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12.44
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-38
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136
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Variation in basis
points for figures given in percentages and in % for figures in Rs crore
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Business Highlights:
Moderate business growth: The business of the bank has increased 7% YoY to
Rs 148449 crore end June 2023, driven by 5% rise in advances to Rs 61489 crore.
Deposits rose 8% to Rs 86960 crore at end June 2023.
CASA deposits ratio stable: The CASA deposits of the bank rose 6% YoY to Rs 27992
crore at end June 2023. The current account deposits stood at Rs 4658 crore,
while saving account deposits were at Rs 23077 crore end June 2023. The CASA
ratio declined to 32.2% at end June 2023 compared to 32.8% at end June 2022,
while eased from 33.0% a quarter ago. The term deposits have increased 9% to Rs
58968 crore end June 2023.
Subdued loan growth: Advances growth was driven by retail loans
rising 7% YoY to Rs 31175 crore at end June 2023, while credit to MSME was flat
at Rs 17094 crore at end June 2023. The corporate credit has moved up 8% to Rs 13220
crore end June 2023.
Margins improve: The bank has showed 63 bps YoY jump in cost of
deposits to 5.10%, while yield on advances increased 119 bps YoY to 10.00% in
Q1FY2024. Thus, the NIM has improved 35 bps YoY to 3.68%.
Book value of the bank stood at Rs 258.4 per share at end June 2023, while
the adjusted book value (net of NNPA and 10% of restructured advances) was Rs 223.1
per share at end June 2023.
Quarterly Performance
NII rises as NIM improves: Bank has recorded 20% increase in the interest
earned at Rs 1958.74 crore, while interest expenses increased 22% to Rs 1144.06
crore in Q1FY2024. NII improved 18% to Rs 814.68 crore in the quarter ended
June 2023.
Fee income declines: Bank has posted -6% decline in core fee income
to Rs 273 crore, while the treasury income rebounded to Rs 51 crore, leading to 144% surge in the overall
non-interest income to Rs 323.84 crore in the quarter ended June 2023.
Expenses ratio improves: The operating expenses of the bank increased 32%
to Rs 537.35 crore, as other expenses moved up 7% to Rs 244.77 crore, while
employee expenses increased 64% to Rs 292.58 crore in Q1FY2024. Cost to income
ratio declined to 47.2% in Q1FY2024 compared with 49.7% in Q1FY2023, helping
the Operating Profit to increase 46% to Rs 601.17 crore.
Provisions and contingencies decline: The bank has showed -58% decline in provisions
to Rs 151.57 crore.
Effective tax rate rebounded to 17.5% in Q1FY2024 from negative 128.9% in
Q1FY2023. Net Profit rose by 225% YoY to Rs 370.70 crore during quarter ended
June 2023.
Financial Performance FY2023:
Bank has posted 132% increase in net profit to
Rs 1180.24 crore in the year ended March 2023 (FY2023). The net interest income
increased 28% to Rs 3185.10 crore, while non-interest income moved up 4% to Rs 992.58
crore, pushing up net total income by 21% to Rs 4177.68 crore in FY2023. The
operating expenses increased 9% to Rs 1969.45 crore, while provision and
contingencies declined 18% to Rs 767.19 crore, allowing profit before tax to
increase 107% to Rs 1441.04 crore in FY2023. The cost-to-income ratio improved
to 47.1% in FY2023 compared to 52.6% in FY2022. An effective tax rate declined
to 18.1% in FY2023 compared to 26.8% in FY2022. The net profit has increased 132%
to Rs 1180.24 crore in FY2023.
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Karnataka Bank: Results
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Particulars
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2306 (3)
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2206 (3)
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Var %
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2303 (12)
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2203 (12)
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Var %
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Interest Earned
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1958.74
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1629.08
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20
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7220.23
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6221.66
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16
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Interest Expended
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1144.06
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941.52
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22
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4035.13
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3730.63
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8
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Net Interest Income
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814.68
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687.56
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18
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3185.10
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2491.03
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28
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Other Income
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323.84
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132.79
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144
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992.58
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953.88
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4
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Net Total Income
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1138.52
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820.35
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39
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4177.68
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3444.91
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21
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Operating Expenses
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537.35
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407.57
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32
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1969.45
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1810.91
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9
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Operating Profits
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601.17
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412.78
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46
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2208.23
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1634.00
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35
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Provisions &
Contingencies
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151.57
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362.90
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-58
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767.19
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939.44
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-18
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Profit Before Tax
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449.60
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49.88
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801
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1441.04
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694.56
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107
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Provision for tax
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78.90
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-64.30
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PL
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260.80
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185.94
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40
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PAT
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370.70
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114.18
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225
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1180.24
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508.62
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132
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EPS*(Rs)
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47.46
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14.62
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37.79
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16.28
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Adj BV (Rs)
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223.06
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166.13
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206.53
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155.78
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* Annualized on current equity of
Rs 312.44 crore. Face Value: Rs 10, Figures in Rs crore, PL: Profit to loss,
LP: Loss to Profit
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Source: Capitaline Corporate
Database
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