Karnataka Bank conducted a conference call on 03 August 2023 to discuss its financial results for the quarter ended June 2023. Srikrishnan Harihara Sarma, MD and CEO of the bank addressed the call:

Highlights:

 The bank has recorded the record high net profit of Rs 370 crore in Q1FY2024.

The growth in advance on annualized basis stands at 10% in June quarter and the deposit growth is at 8%.

The bank has maintained healthy Casa deposit ratio of 32%.

The credit deposit ratio was at 70% end June 2023.

The bank has substantially reduced net NPA ratio to 1.43% end June 2023.

The fresh slippages of NPAs is under control with fresh slippage ratio at 0.5% in Q1FY24 compared with 3.31% in Q1FY23.

The provision coverage ratio is improved to a historic high of 83.47% end June 2023.

The net interest margin is within the guided range of 3.5 to 3.7%.

The new management is focusing on changing the culture of the bank towards the sales. The bank is introducing sales channel boards on liabilities as well as asset side.

The bank is looking at raising new to bank account customer addition from existing 4000 per day.

The bank has a customer base of 1.3 crore and it is looking at high level up sale and cross sale opportunities.

The bank would be using the analytics, while it is focusing on innovative partnerships with fintech for co-lending consumer loans and MSME loans.

The uptick in the CASA deposits in Q3 and q4 and the picking up of the government business is expected to help maintain cost of deposit.

With the continuous investment the bank expects the cost to income ratio to be in the range of 48 to 50% which will improve letter when revenue picks up.

The bank is targeting to raise the loan book to Rs 73000-75000 crore by March 2024.

The bank also aims to improve raise to loan book to Rs 1 lakh crore level and raise CD ratio to 80% in next 3-4 years.

The bank is targeting RoA in the range of 1.2-1.4% for FY24

The fresh slippages of loans stood at Rs 292 crore, upgradations at Rs 90 crore recoveries at Rs 167 crore and write offs at Rs 10 crore.

The share of loan book linked to the MCLR stands at 20.31%, EBLR 6.54% and TBLR is 46.9% end June 2023.

The core fee income stood at Rs 273 crore in Q1FY2024.

The credit cost stood at 0.28% for Q1FY24 and it is expected to similar for the rest of the FY 24.

The fresh slippage ratio was at 0.5% in Q1FY24 and it is expected to remain at same level for rest of 2024.

The bank expects to reduce net NPA ratio to 1.2% by and March 2024.

The SMA 2 loan book of the bank stood at Rs 197 crore.