Karnataka
Bank conducted a conference call on 30 May 2023 to discuss its financial
results for the quarter ended March 2023. Sekhar Rao, interim MD and CEO of the
bank addressed the call:
Highlights:
The
focus of the bank is on digitization which is expected to gather accelerated pace
going forward.
The
bank has recorded 4 digit net profit for the first time at Rs 1180 crore in FY2023.
The
first slippage ratio was higher at 3.31% in Q4FY23 compared with 3.11% in Q4
last year on accounts of accelerated recognition of NPAs.
The bank
has also accelerated provisions with additional provisions of Rs 249 crore in Q4FY2023
out of overall provisions of Rs 328 crore. This helped the bank to reduce net
NPAs in Q4FY23.
The bank
has raised the PCR to 81% from 73% last year and aims to further improve PCR to
85% in FY2024.
The
bank has a well protected its Casa franchise. The cost of saving deposit is
competitive at 2.94%. The bank has witnessed decline in the credit deposit
ratio to 69% from 71%.
The bank
is expecting significant improvement in the asset quality, while the loan growth
is expected to be ahead of the industry growth in FY2024.
The bank
aims to become a retail centric bank over next one decade.
The
bank aims to improve the underwriting process to reduce the turnaround time. About
85% of the retail loans are processed digitally and the bank aims to further
improve the share of digitally processed loans.
The bank
has a 3 retail hubs and it is planning to add another two hubs and eventually
raise the number of retail hubs to 8.
The bank
expects some moderation in the net interest margin from 3.7% in FY2023 to 3.5-3.7%
for FY2024, which would be offset by the business growth, efficiency improvement
and higher other income.
The
return on asset and return on equity would be marginally higher in FY2024 over
FY2023.
There is
a significant reduction in the restructured loan book and over 90% of the restructured
loans are currently repaying.
The restructured
loan book also includes the related accounts and thus the actual core
restructured loan book is lower.
The slippages
from the restructured loan book were at Rs 630 crore in FY2023.
The
bank has witnessed Rs 180 crore of MTM losses in FY2023, while the bank expects
to reverse some of these losses in FY2024.
The bank
expects marginal increase in cost-to-income ratio on account of provisions for wage
revision.
The credit
cost is expected to be at 0.25-0.3% in FY2024.
The
share of floating rate loan books and set 79% under fixed rate loan book stands
at 21% end March 2023.
Recoveries
in written off accounts stood at Rs 283 crore in FY 2023. The bank is targeting
recoveries in written off accounts of Rs 250-275 crore for FY2024.
New MD will take
charge on 09 June 2023.
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