Capitaline

Analyst Meet / AGM 17-Jul-17

Conference Call

Karnataka Bank

Expects to reduce GNPA ratio to 4% and NNPA ratio to 2% by end March 2018

Karnataka Bank conducted a conference call on 17 July 2017 to discuss the financial results for the quarter June 2017 and prospects of the Bank. Mahabaleshwara MS, MD & CEO of the bank addressed the meet:
Highlights:

The bank has posted stable 10% growth in business to Rs 94711 crore, driven by 10% growth in advance end June 2017 over June 2016. The deposits of the bank moved up at slower pace of 9%, while CASA deposits surged 20% helping the bank to improve CASA ratio to 28.9% end June 2017 from 26.2% a year ago.
The bank has improved credit-deposit ratio to 68.4% end June 2017 from 65.2% end March 2017 and 67.9% end March 2017. The bank has targeted to improve credit-deposit ratio to 70% by end March 2018, while expects to achieve the target earlier by September 2017.
As per the bank, the first quarter of the financial year always challenging for loan growth. However, the bank has exceeded the loan book expansion target by Rs 129 crore for Q1FY2018. The bank has aimed for loan growth of 20%, while expected to achieve 15-17% loan growth in FY2018.
The bank has added 9.59 lakh CASA accounts during last one year to take the CASA strength to 83,56,502 accounts end June 2017 from 73,97,863 accounts end June 2016.
The employee base of the company has increased to 8100 end June 2017 up from 7776 end June 2016.
The bank has improved net interest margin (NIM) to 2.64% in Q1FY2018 from 2.17% in the previous quarter and 2.55% in corresponding quarter last year. The bank has substantially reduced cost of deposits to 6.33% in Q1FY18 from 6.95% in Q1FY2017. The bank expects to continue improvement in margins going forward.
The fresh slippages of loans was elevated at Rs 498 crore in Q1FY2018 compared with Rs 511 crore in the previous quarter. As per the bank, one large steel sector account from northern India with the exposure of Rs 122 crore (banking sector exposure of Rs 3000 crore) was major slippage in Q1FY2018. The bank is expecting the recovery of account in Q2FY2018.
About 65% of the NPAs of the bank are new and forms part of sub-standard category requiring provision of 15%, which has shown improvement from 53% a year ago. Thus, the bank is required to make low provisions and the provision coverage ratio has declined to 52% end June 2017 from 54% end March 2017. Accordingly, the Net NPA ratio is also showing higher increase compared with Gross NPA ratio in Q1FY2018.
The SMA-2 category loans of the bank stood at Rs 1742 crore end June 2017 compared with Rs 1499 crore end June 2016.
As per the bank, it has exposure to 1 account amounting to Rs 50 crore of the 12 accounts identified by the RBI for resolution under IBC.
The gross restructured loans of the bank also declined to Rs 1139.6 crore end June 2017 from Rs 1759.3 crore end June 2016.
The bank has exposure of Rs 378 crore to Strategic Debt Restructuring (SDR) scheme, Rs 20 crore to S4A scheme and Rs 195 crore to 5/25 refinancing scheme.
The bank has not conducted any sale of assets to Asset Reconstruction Companies (ARCs) in Q1FY2018, while its exploring opportunities for some asset sale in Q2FY2018..
The bank is confident of able to reduce GNPA ratio to 4% and NNPA ratio to 2% by end March 2018.
The bank has been consistently achieving the priority sector loan (PSL) targets, helping to further reduce RIDF investment to Rs 1305 crore end June 2017 from Rs 1399 crore end March 2017.
The capital adequacy ratio of the bank stands at comfortable level of 13% end June 2017.
The bank has recorded write-back of tax provisions worth Rs 23.03 crore in Q1FY2018, as the tax benefits on NPA provisions of Rs 196 crore and write-offs worth Rs 338 crore helped to more than compensate for tax expenses. The bank expects tax rate 15% for FY2018.
The debit card penetration for the bank stood at 79% end June 2017, while the bank is on track to reach target of 85% by end March 2018. The mobile banking penetration has jumped from 12% end June 2016 to 21% end June 2017. However, with the jump in mobile banking penetration, the internet banking penetration has declined to 63% from 66%.
The bank has improved the share of digital transaction to 57% end June, while its on track to reach 60% by end March 2018 and further higher to 80% by end March 2020.
The bank has posted 8% growth in the fee based income in Q1FY2018, while expects the double digit fee income growth for rest of FY2018.
The higher cost-to-income ratio is cause of concern, while bank expects to reduce cost-to-income ratio below 50% going forward.

Previous News

Karnataka Bank consolidated net profit rises 10.17% in the December 2023 quarter
( Results - Announcements 23-Jan-24 17:44 )

Karnataka Bank
( Analyst Meet / AGM - Conference Call 24-Jan-24 09:32 )

Karnataka Bank announces strategic tie-up with Bajaj Allianz Life Insurance
( Corporate News - 23-Nov-23 17:45 )

Karnataka Bank
( Results - Analysis 04-Aug-23 08:45 )

Karnataka Bank tie-up with JCB India
( Corporate News - 16-Jul-22 12:05 )

Karnataka Bank partners with JCB India for equipment financing biz
( Hot Pursuit - 16-Jul-22 16:41 )

Karnataka Bank raises term deposit interest rates
( Corporate News - 29-Sep-22 09:40 )

RBI imposes penalty of Rs 1.20 cr on Karnataka Bank
( Corporate News - 29-May-20 10:21 )

Karnataka Bank
( Analyst Meet / AGM - Conference Call 25-May-24 13:29 )

Benchmarks turn rangebound; Nifty hovers above 17550; bank stocks rise
( Market Commentary - Mid-Session 03-Mar-23 12:34 )

Karnataka Bank Q4 PAT rises 15% YoY
( Hot Pursuit - 27-May-21 12:03 )