Money & Banking

Karnataka Bank Q2 net down 5% on higher provisioning

Our Bureau Mangaluru | Updated on October 15, 2019 Published on October 15, 2019

Karnataka Bank has registered a net profit of ₹105.91 crore in the second quarter of 2019-20, against a profit of ₹111.86 crore in the corresponding period of the previous fiscal, recording a decline of 5.32 per cent.

Speaking to BusinessLine after a meeting of the board of directors of the bank to approve the financial results for Q2 of 2019-20, in Mangaluru, on Tuesday, Mahabaleshwara MS, Managing Director and CEO of the bank, said the decline in net profit during the quarter was mainly on account of increased provisioning.

Stating that there was an increase of 16.02 per cent in the operating profit during the second quarter of 2019-20, he said: “When operating profit was reasonably good we thought that we would focus more on provisioning. As a result, provisions increased from ₹168.69 crore about a year back to ₹291.45 crore in Q2 of FY20.” Following this, the provision coverage ratio also increased to 59.19 per cent (57.49 per cent).

“We thought of further strengthening the balance sheet by improving the provision. Anyhow the provision has come from the operating profit,” he said, adding that the net profit has been maintained at above ₹100 crore.

Net, gross NPAs

Gross NPAs (non-performing assets) of the bank stood at 4.78 per cent (4.66 per cent), and net NPA at 3.48 per cent (3 per cent) during the quarter.

Mahabaleshwara said eventhough there is an increase in the terminal amount of the NPA, this was mainly on account of one export account of ₹101 crore. Terming it as a temporary aberration, he said this is one of the existing and long-standing customers. “Most probably this is likely to be upgraded to the standard category during this month itself. But for that there is no big slippages. Eventhough NPA figure is slightly on the higher side, this is very much under control,” he said.

Mahabaleshwara hoped that the gross NPA would be somewhere around 4 per cent and net NPA at around 3 per cent by March 2020. The net interest income of the bank stood at ₹498.72 crore (₹467.71 crore), and other income at ₹308.76 crore (₹201.20 crore) during the second quarter.

The bank recorded a total business of ₹1,23,658.07 crore as on September 30, registering a year-on-year (y-o-y) growth of 8.61 per cent. The bank’s deposits rose to ₹70,189.65 crore during the quarter, registering a y-o-y growth of 9.87 per cent. The low-cost CASA (current account savings account) funds constituted 27.41 per cent of the deposits. Advances of the bank increased to ₹53,468.42 crore during the quarter, registering a y-o-y growth of 7 per cent.

Outlook

Going forward, the bank will focus more on CASA augmentation, credit growth with a special focus on retail and mid-corporates, asset quality by concentrating on timely recovery, and by preventing further slippages. Thus, the bank is optimistic of growth prospectus in the days to come, with its customer-centric approach, he said.

On Tuesday, the scrip of Karnataka Bank closed at ₹70.60, down by 0.14 per centagainst the previous close of ₹70.70.

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Published on October 15, 2019
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