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Karnataka Bank has recorded strong 30% increase in the net profit to Rs 138.37 crore in the quarter ended March 2017 (Q4FY2017). The healthy growth in the bottomlines of the bank was driven by surge in non-interest income and improvement in cost-to-income ratio. The bank has improved asset quality stable, while business improved at steady pace of 11% in Q4FY2017. CASA ratio of the bank was strong at 29% at end March 2017. The bank has improved credit-deposit ratio to 65.2% end March 2017 from 62.3% end December 2016. The share of retail loans improved to 52.6% at end March 2017. However, the margins of the bank were impacted due to interest income reversals of Rs 38 crore on Strategic Debt Restructuring (SDR).
Asset quality improves: Bank has improved asset quality in the quarter ended March 2017 with the strong recoveries and write-offs.
- Fresh slippages of advances increased to Rs 511 crore in Q4FY2017 from Rs 267 crore in the previous quarter. Meanwhile, the recoveries and write-off stood at Rs 490 crore for the quarter.
- Outstanding standard restructured advances of the bank dipped to Rs 1037.10 crore (2.80% of advances) at end March 2017 compared to Rs 1330.25 crore (3.72% of advances) at end December 2016.
- Stressed assets (NNPA and restructured advances) declined to 5.44% of advances at end March 2017 from 6.70% at end December 2016 and 6.91% at end March 2015.
- RWA increased 12% to Rs 38902.00 crore at end of March 2017 from a year earlier.
| Asset Quality Indicators: Karnataka Bank |
|
1703 |
1612 |
1609 |
1606 |
1603 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
1581.59 |
1560.23 |
1344.50 |
1389.36 |
1180.40 |
1 |
34 |
| Net NPA (Rs Crore) |
974.73 |
1065.66 |
961.36 |
911.23 |
795.47 |
-9 |
23 |
| % Gross NPA |
4.21 |
4.30 |
3.64 |
3.92 |
3.44 |
-9 |
77 |
| % Net NPA |
2.64 |
2.99 |
2.63 |
2.61 |
2.35 |
-35 |
29 |
| % CRAR - Basel III |
13.30 |
13.19 |
11.19 |
11.64 |
12.03 |
11 |
127 |
| % CRAR - Basel III - Tier I |
12.21 |
11.86 |
9.84 |
10.27 |
10.56 |
35 |
165 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Performance:
Steady business growth: Business of the bank increased at nearly steady pace of 11% yoy to Rs 93737 crore at end March 2017. Deposits increased 12% to Rs 56733 crore, while advances moved up 9% to Rs 37004 crore at end March 2017. Credit-deposit ratio rose to 65.2% at end March 2017 from 62.3% at end December 2016.
CASA ratio improves: CASA deposits increased 24% to Rs 16473 crore. CASA ratio improved to 29.0% at end March 2017 compared with 26.3% at end March 2015.
Retail loans driving advances growth: Advances rose 9% at Rs 37003.65 crore at end March 2017. The corporate advance rose 10% to Rs 17540 crore, while the retail advance galloped 9% to Rs 19464 crore at end March 2017.
* Retail advances gained share to 52.6% at end March 2017 from 52.4% at end December 2016.
* Break-up of advances shows housing at 13.2% of the advances, agriculture - 14.4%, SME - 22.6%, medium enterprises - 3.5%, large enterprises - 12.1%, other personal loans - 6.0% and other - 28.2% at end March 2017.
* Priority sector loans (PSL) of the bank stood at 48.1% of advances at end March 2017, while consistently exceeding the regulatory PSL target of 40%, while increased from 47.1% at end December 2016 and 47.6% at end March 2015.
Investment book of the bank increased 24% to Rs 20220 crore at end March 2017. SLR investment stood at Rs 13881 crore. Share of AFS book increased to 42.5% at end March 2017 from 35.8% a quarter ago and 31.1% a year ago. The modified duration of AFS book declined to 1.46 years, while that of overall investment book also fell to 3.79 years at end March 2017.
Network expansion: Bank has opened 27 branches and 46 ATMs in the quarter ended March 2017. Bank has the network of 765 branches and 1380 ATMs at end March 2017. Bank proposes to open 35 branches in FY2017.
Book value stood at Rs 181.91 per share at end March 2017. Adjusted Book value (excluding NNPA and 10% of restructured assets) was at Rs 143.77 per share at end March 2017.
Quarterly Performance
NII declines as NIMs dip: For the quarter ended March 2017, the bank has posted 1% growth in interest income to Rs 1294.50 crore while interest expenses increased 3% to Rs 942.33 crore. NII declined 2% to Rs 352.17 crore, as net interest margin (NIM) declined to 2.17% in Q4FY2017 from 2.57% in Q4FY2016.
Non-interest income growth improves: The non-interest income of the bank increased 83% to Rs 311.69 crore in Q4FY2017. The core fee income of the bank declined 3% to Rs 147 crore, while trading income surged 763% to Rs 164 crore in Q4FY2017 over Q4FY2016. Net Total income rose 25% to Rs 663.86 crore in quarter under review.
Expense ratio improves: Operating expenses increased 22% to Rs 334.59 crore. The employee cost moved up 16% to Rs 122.71 crore in Q4FY2017, while the other operating expenses increased 25% to Rs 211.88 crore. Expense ratio dipped to 50.4% in Q4FY2017 compared with 52.0% in Q4FY2016.
The operating profit rose 29% to Rs 329.27 crore in the quarter ended March 2017.
Provisions rises: Bank has witnessed surge in provisions and contingencies to Rs 160.40 crore in Q4FY2017 as against Rs 112.50 crore in the corresponding quarter last year.
The Profit before tax (PBT) increased 19% to Rs 168.87 crore in Q4FY2017 over Q4FY2016.
Tax provision declines: The effective tax rate was lower at 18.06% in Q4FY2017 compared with 24.7% in Q4FY2016. Net profit surged 30% to Rs 138.37 crore in Q4FY2017.
Annual Financial Performance:
For the year ended March 2017 (FY2017), the bank has posted 9% increase in net profit to Rs 452.26 crore. The net interest income improved 14% to Rs 1490.62 crore, while non-interest income surged 49% to Rs 809.34 crore in FY2017. The expense ratio jumped 300 bps to 56.7% in FY2017 compared to 53.7% in FY2016. The operating expenses increased 17% to Rs 995.80 crore, while provision and contingencies galloped 62% to Rs 527.85 crore. The profit before tax declined 11% to Rs 467.95 crore in FY2017. After considering 3% of effective tax rate, the net profit improved 9% to Rs 452.26 crore in FY2017.
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