Karnataka Bank's net profit plunges 75.3%

The bank reports Rs 29 cr profit for the quarter ended September 30 compared with Rs 117 cr in the corresponding quarter of FY13

Mangalore-based private sector lender Karnataka Bank Ltd on Monday reported a 75.3-per cent decline in net profit at Rs 28.95 crore for the quarter ended September 30 compared with Rs 117.19 crore in the corresponding quarter of FY13.

Higher provisioning towards non-performing assets (NPAs) contributed towards the steep fall in net profit. The bank’s provisions went up 5.5 times to Rs 127 crore in the second quarter, compared to Rs 23 crore in the corresponding period last year. Net NPAs stood at Rs 593 crore, up from Rs 464 crore in the year-ago period.

“Our NPAs increased due to CDR (corporate debt restructuring) accounts worth Rs 110 crore. We are currently restructuring these assets and will recover the amount in the third quarter,” said P Jayarama Bhat, managing director, Karnataka Bank.

Operating profit grew 8.11 per cent to Rs 171.64 crore, against Rs 158.77 crore in the year-ago period. The total income for the quarter increased 11.63 per cent to Rs 1,152.49 crore, against Rs 1,032.37 crore in the year-ago quarter.

The bank’s net interest income grew 22.31 per cent to Rs 284.54 crore from Rs 232.64 crore in the year-ago period. Other income grew one per cent, year-on-year to Rs 87.80 crore.

The bank recorded 18.19 per cent growth in advances at Rs 26,469 crore and deposits grew 11.91 per cent to Rs 38,014 crore.

The ratio of net NPAs stood at 2.25 per cent against 2.08 per cent a year ago. The capital adequacy ratio improved to 13.47 per cent from 12.17 per cent a year ago. The return on assets declined to 0.27 per cent from 1.21 per cent in the year-ago period.

On Monday, the bank’s shares closed at Rs 104.65 on BSE, down 1.46 per cent from the previous close.