Karnataka Bank Ltd registered a net profit of ₹196.38 crore in the first quarter of 2020-21 as against a net profit of ₹175.42 crore in in the corresponding period of 2019-20, recording a growth of 11.95 per cent.

Speaking to BusinessLine after the virtual meeting of the board of directorsto approve the financial results for quarter ended June 30, Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, said the bank has been able to sail through successfully in the Covid-19 affected first quarter with flying colours.

He said the expenditure control, robust growth in treasury profit and a decent growth in interest income on account of improved interest spread helped achieve this result.

There is a decent growth in interest income, even though the growth in advances is muted, he said. The net interest income of the bank witnessed a growth of 8.19 per cent.

He said the robust growth of treasury profit helped the bank to register a growth of 93.43 per cent in operating profit during the first quarter of 2020-21. The operating profit of the bank stood at ₹677.04 crore (₹350.01 crore) during the period.

Stating that the bank had an option of absorbing amortised provision of ₹189 crore equally during the first, second, and third quarters of 2020-21. “Since our operating profit was good, we have absorbed that entire ₹189 crore during this quarter itself. There is no provisions requirements in this regard in future quarters,” he said.

That is the reason why the bank has seen a growth in capital adequacy ratio from 12.66 per cent in Q1 of 2019-20 to 13.07 per cent in the first quarter of 2020-21, he said.

Regulatory package

To a query on the ‘Covid-19 Regulatory Packages’ announced by RBI with regard to providing relief to borrowers on account of the pandemic whose accounts were standard as on February 29, and the provisions for such accounts, he said in accordance with RBI guidelines the banks were supposed to make 10 per cent provision. That provision was supposed to be distributed in two quarters.

The bank has absorbed that entire 10 per cent during June quarter itself. The bank has provided ₹98 crore as special Covid-19 provision. This is for the standard advances, he said.

“Almost all the provision is fully met, and the future provision requirement is also taken care of in this result. That is why we have focused more on strengthening the balance sheet, and minimising the future hit,” he said.

Asked about the future outlook for the coming quarters, Mahabaleshwara said the bank will continue to be cautious and conservative. “I am optimistic that we will be able to show a steady and sustainable performance during the current year,” he added.

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