Karnataka Bank aims ₹85K cr loan book by March 2026 as operations stabilise

After stabilising operations, Karnataka Bank aims to expand its loan book beyond Rs 85,000 crore by March 2026 with growth led by retail, agriculture and MSME lending

After witnessing a contraction in credit in the first quarter, private lender Karnataka Bank expects to expand its loan book by Rs 7,000–8,000 crore, predominantly in the retail, agriculture and MSME (RAM) segments, to cross Rs 85,000 crore by March 2026.

 

The operations of the Mangaluru-based lender, which faced challenges after the exit of its managing director and chief executive officer and executive director in Q1FY26, have now stabilised, according to the transcript of an analysts’ call after its Q1FY26 results. The bank’s gross advances declined by 1.6 per cent to Rs 74,267.02 crore as of 30 June 2025, from Rs 75,455.01 crore at the end of June 2024 (Q1FY25).

 

“The bank’s target is to grow the loan portfolio to Rs 89,000 crore, and we will make an attempt to achieve that. But Rs 85,000–86,000 crore of advances by the end of FY26 will definitely give us a boost while we make efforts to reach Rs 89,000 crore,” its current MD and CEO Raghavendra S Bhat said on the analysts’ call. He was appointed MD and CEO from 16 July 2025 for a three-month period, or until the appointment of a regular MD and CEO, whichever is earlier.

 

The lender has revamped its credit policy across key products in housing, mortgage, gold and MSME loans. It plans to reduce exposure to low-yielding large- and mid-corporate loans that were opportunistically deployed for better returns than treasury. The strategy, bank executives said, would be to accelerate retail growth while stabilising the mid- and large-corporate portfolio with good quality, better-yielding loans.

 

Its retail book rose from Rs 19,499 crore in June 2024 (Q1FY25) to Rs 21,538 crore in June 2025 (Q1FY26). The MSME portfolio contracted from Rs 14,834 crore to Rs 13,860 crore, while the agriculture book expanded from Rs 10,906 crore to Rs 12,168 crore, according to an analysts’ presentation.

 

The lender posted a 27 per cent decline in net profit to Rs 292.4 crore in Q1FY26 from Rs 400.33 crore in Q1FY25, owing to a fall in net interest income and higher provisions.