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Karnataka Bank’s net profit declined 24.58 per cent to ₹93.38 crore in the second quarter of 2017-18 compared with a net profit of ₹123.82 crore in the corresponding period of the previous fiscal.
Speaking to BusinessLine after the meeting of the board of directors of the bank to approve the financial results for Q2 of 2017-18, Mahabaleshwara MS, Managing Director and Chief Executive Officer, attributed the fall in net profit to the frontloading of future risks of the bank.
Explaining this, he said the bank has treated one account belonging to infrastructure sector with an exposure of ₹230 crore as a non-performing asset (NPA) even though it is under debt realignment. In that account, the bank has made a provision of 25 per cent.
“That hit we have frontloaded during this quarter. This is a conscious decision taken by the management to frontload the future risk,” he said.
Provisions and contingencies (other than tax) stood at ₹225.98 crore(₹130.55 crore).
Stating that other business parameters are on strong footing, Mahabaleshwara said operating profit went up 57.35 per cent, and advances registered a growth of 12.34 per cent. The credit-deposit ratio increased to 72.22 per cent (68.95 per cent) during the quarter.
Net interest income (NII) of the bank stood at ₹440.23 crore (₹397.25 crore) and other income at ₹247.82 crore (₹189.71 crore) during the quarter. The net interest margin increased to 3.09 per cent (3.03 per cent).
The gross and net NPAs of the bank stood at 4.13 per cent (3.4 per cent) and 3.04 per cent (2.63 per cent), respectively.
On the future outlook, Mahabaleshwara said there may not be much pressure on the asset quality, going forward. But the provision requirement on account of resolution of some of the accounts either under the National Company Law Tribunal or any other debt restructuring activities will have to be keenly watched.
“Otherwise, it is just the beginning of the strong and sustainable growth of Karnataka Bank,” he said.
TheK arnataka Bank scrip closed at ₹163.35, up 6.69 per cent, on the BSE on Friday against the previous close of ₹153.10.
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