Karnataka Bank Q1 net down 46% to Rs 106 cr as treasury income dips

Mulls QIP for equity capital raise

Private sector lender Karnataka Bank's net profit fell by 46 per cent to Rs 106.08 crore in the first quarter ended June 2021 (Q1FY22) on a dip in treasury income.

The bank had posted a net profit of Rs 196.38 crore during the same quarter last year (Q1FY21). Sequentially, the bank had booked a profit of Rs 31.36 crore in the quarter ended March 2021 (Q4FY21).

Mahabaleshwara M S, Managing Director & Chief executive of the bank, said the reduction in net profit is mainly on account of decline in treasury gains, which is dependent on yield movements. Its other income covering treasury operations fell by 54.54 per cent YoY to Rs 235.91 crore in Q1FY22. Sequentially, it was down 36.8 per cent from Rs 373.21 crore in Q4Fy21.

Karnataka Bank stock closed 1.17 per cent lower at Rs 59.05 per share on BSE. The bank’s total Capital Adequacy Ratio (CRAR) stood at 14.58 per cent in June 2021. Further, the bank board gave a nod for capital augmentation through Qualified Institutional Placements (QIP). It expects to issue 150 million equity shares. It is seeking shareholders nod for proposed equity offering.

Its net interest income (NII) rose by 7.41 per cent in Q1FY22 to Rs 574.79 crore from Rs 535.12 crore in Q1FY21. Sequentially NII rose by 25.19 per cent to Rs 459.14 crore in Q4Fy21. Net interest margin (NIM) for the reporting quarter rose to 2.98 per cent for Q1FY22 from 2.89 per cent for Q1FY21. NIM was 2.41 per cent in Q4Fy21.

The bank's gross non-performing assets (NPAs) rose to 4.82 per cent in June 2021 from 4.64 per cent a year-ago. Sequentially, GNPAs fell from 4.91 per cent in March 2021.

Net NPAs were almost flat at three per cent during the quarter from 3.01 per cent a year ago. Net NPAs were at 3.18 per cent in March 2021.

Its provisions fell to Rs 368.08 crore in Q1FY22 from Rs 509.07 crore in Q1FY21. The provisions rose marginally at Rs 341.83 crore in Q4Fy21.

The provision coverage ratio (PCR) rose to 67.93 per cent for Q1Fy22 from a year ago.

Advances fell by 4.46 per cent to Rs 51, 791 crore in Q1FY22, while deposits also grew by 6.07 per cent to Rs 76,214 crore in June 2021.

Compared to the sequential previous quarter (Rs 51,693 crore in Q4FY21), the advances have shown marginal increase. And they are expected to consolidate further during the second quarter of the current year. Hence, the core business is expected to do well going forward, besides further improving the asset quality, he added.