Karnataka Bank
(22:06, 12 Jan 2018)
Karnataka Bank recorded 28% increase in the net profit to Rs 87.38 crore in the quarter ended December 2017 (Q3FY2018), driven by strong 20% growth in net interest income and healthy 46% spurt in non-interest income. Meanwhile, bank has continued to show improvement in asset quality in Q3FY2018 with the further decline in fresh slippages of loans. The bank has also showed sharp dip in expense ratio to 50.2% in Q3FY2018, supporting strong growth in operating profit.

Bank has improved business growth to 10% with strong 24% growth in loan book, while recorded steep surge in credit-deposit ratio to 76.9% end December 2017. The bank has maintained CASA ratio at healthy level of 28.2% end December 2017. The bank has also showed strong improvement in margin to above 3% mark at 3.09% for Q3FY2018.

However, the credit cost has continued to remain higher for the bank in Q3FY2018.

Asset quality improving: Bank has further improved its asset quality in the quarter ended December 2017 with the dip in fresh slippages of advances.

  • Fresh slippages of advances eased to Rs 211 crore in Q3FY2018 from Rs 374 crore in the previous quarter. Meanwhile, the recoveries, upgradations and write-off stood at Rs 142 crore for the quarter.
  • Outstanding standard restructured advances of the bank eased to Rs 897 crore (2.02% of advances) at end December 2017 compared to Rs 910 crore (2.21% of advances) at end September 2017.
  • Stressed assets (NNPA and restructured advances) declined to 4.86% of advances at end December 2017 from 5.24% at end September 2017 and 6.70% at end December 2016.
  • RWA increased 14% to Rs 43326.00 crore at end of December 2017 from a year earlier.
Asset Quality Indicators: Karnataka Bank
Gross NPA (Rs Crore)1784.311715.701690.871581.591560.2341314
Net NPA (Rs Crore)1262.961246.811229.84974.731065.6613019
% Gross NPA3.974.134.344.214.30-16-24-33
% Net NPA2.853.043.202.642.99-1921-14
% CRAR - Basel III12.2612.4613.0213.3013.19-20-104-93
% CRAR - Basel III - Tier I11.1411.4411.9412.2111.86-30-107-72
Variation in basis points for figures given in percentages and in % for figures in Rs crore

Business Performance:

Business growth improves; business crosses Rs 1 lakh crore level: Business of the bank increased at improved pace of 10% yoy to Rs 102182 crore at end December 2017. Deposits rose mere 1% to Rs 57771 crore, while advances zoomed 24% to Rs 44411 crore at end December 2017. Credit-deposit ratio galloped to 76.9% at end December 2017 from 72.7% at end September 2017.

Stable CASA ratio: CASA deposits declined 6% to Rs 16306 crore. CASA ratio has remained healthy at 28.2% end December 2017, compared with 28.6% at end September 2017, while declined from 30.2% end December 2016.

Corporate loan growth surges: Advances increased 24% at Rs 44411 crore at end December 2017. The corporate advance galloped 38% to Rs 23582 crore, while the retail advance moved up 11% to Rs 20829 crore at end December 2017. Retail advances share dipped to 46.9% at end December 2017 from 52.4% at end December 2016.

Break-up of advances shows housing at 12.3% of the advances, agriculture - 12.6% , SME - 20.6% , medium enterprises - 3.2% , large enterprises - 12.0% , other personal loans - 5.7% and other - 33.6% at end December 2017.

Priority sector loans (PSL) of the bank stood at 47.0% of advances at end December 2017, consistently exceeding the regulatory PSL target of 40%, showing increased from 45.2% at end September 2017 and remained steady compared with 47.1% at end December 2016.

Investment book of the bank dipped 14% to Rs 15695 crore at end December 2017. SLR investment stood at Rs 13016 crore. Share of AFS book increased to 24.4% at end December 2017 from 32.8% a quarter ago and 35.8% a year ago.

The modified duration of AFS book declined to 2.38 years, while that of overall investment book was nearly flat at 4.86 years at end December 2017.

Network expansion: Bank has opened 8 branches in the quarter ended December 2017. Bank has the network of 781 branches and 1382 ATMs at end December 2017.

Book value stood at Rs 175.2 per share at end December 2017. Adjusted Book value (excluding NNPA and 10% of restructured assets) was at Rs 127.4 per share at end December 2017.

Quarterly Performance

NII growth surge, as NIMs jumps: For the quarter ended December 2017, the bank has posted 1% growth in interest income to Rs 1332.24 crore, while interest expenses plunged 7% to Rs 880.76 crore. NII rose at improved pace of 20% to Rs 451.48 crore, as net interest margin (NIM) moved up to 3.09% in Q3FY2018 from 2.84% in Q3FY2018.

Core fee income jumps: The non-interest income of the bank increased 46% to Rs 194.62 crore in Q3FY2018. The core fee income of the bank zoomed 59% to Rs 170 crore, while trading income declined 11% to Rs 24 crore in Q3FY2018 over Q3FY2017.

Net Total income rose 27% to Rs 646.10 crore in quarter under review.

Expense ratio dips: Operating expenses declined 4% to Rs 324.20 crore. The employee cost fell 31% to Rs 121.39 crore in Q3FY2018, while the other operating expenses increased 26% to Rs 202.81 crore. Expense ratio plunged to 50.2% in Q3FY2018 compared with 66.3% in Q3FY2017.

The operating profit galloped 87% to Rs 321.90 crore in the quarter ended December 2017.

Provisions surges: Bank has witnessed surge in provisions and contingencies to Rs 196.40 crore in Q3FY2018 as against Rs 100.60 crore in the corresponding quarter last year. The Profit before tax (PBT) jumped 76% to Rs 125.50 crore in Q3FY2018 over Q3FY2017.

Tax provision rises: Banks tax provisions stood at Rs 38.12 crore in Q3FY2018 against Rs 2.74 crore in Q3FY2017. Net profit moved up 28% to Rs 87.38 crore in Q3FY2018.

YTD Financial Performance:

For the nine months ended December 2017 (9MFY2018), the bank has posted flat net profit of Rs 314.61 crore. The net interest income improved 16% to Rs 1316.14 crore, while non-interest income jumped 33% to Rs 659.83 crore in 9MFY2018. The expense ratio dipped by 976 bps to 49.5% in 9MFY2018 compared to 59.3% in 9MFY2017. The operating expenses increased 50% to Rs 997.84 crore, while provision and contingencies surged 69% to Rs 621.26 crore. The profit before tax increased 26% to Rs 376.58 crore in 9MFY2018. After considering 16% of effective tax rate, the net profit came in flat at Rs 314.61 crore in 9MFY2018 over 9MFY2017.

Karnataka Bank: Financial Results

Particulars1712 (3)1612 (3)Var %1712 (9)1612 (9)Var %1703 (12)1603 (12)Var %
Interest Earned1332.241323.9313980.713890.9025185.404992.214
Interest Expended880.76947.42-72664.572752.45-33694.783689.340
Net Interest Income451.48376.51201316.141138.45161490.621302.8714
Other Income194.62133.5946659.83497.6533809.34542.8649
Net Total Income646.10510.10271975.971636.10212299.961845.7325
Operating Expenses324.20338.24-4978.13969.5711304.16991.2032
Operating Profits 321.90171.8687997.84666.5350995.80854.5317
Provisions & Contingencies196.40100.6095621.26367.4569527.85326.5362
Profit Before Tax125.5071.2676376.58299.0826467.95528.00-11
Provisions for tax38.122.74129161.97-14.81PL15.69112.71-86
Net Profit87.3868.5228314.61313.890452.26415.299
* Annualized on current equity of Rs 282.62 crore. Face Value: Rs 10, Figures in Rs crore,
PL: Profit to loss. LP: Loss to Profit
Source: Capitaline Corporate Database

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