Karnataka Bank Ltd's Q4FY18 standalone net profit declines 92.1% yoy to Rs11cr : Misses Estimates

The bank’s standalone NII stood at Rs541.50cr, up 53.76% yoy and 19.94% qoq.

May 18, 2018 06:05 IST India Infoline Research Team

Karnataka Bank Ltd Q4FY18

Standalone Results Q4FY18: ( cr)

Q4FY18 YoY (%)
NII 541.50 53.8
NPA (%) 4.9 71
Provisions 541.75 237.8
Net Profit (adjusted) 11 [92.1]
***NPA change is bps


Reco. Price


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Karnataka Bank’s NII has improved by 53.8% yoy to Rs541.5cr as against Rs 352.2cr. Its net profit for the quarter was below estimates, which has come at Rs11cr against Rs138.4cr yoy, which is down by 92%. GNPA for Q4FY18 stood at 4.92% against 3.97% qoq, which has increased by 95 bps. NNPA for the quarter stands at 2.96% against 2.85% qoq, which has increased by 11 bps.
  • Net Interest Income for FY18 has increased to Rs1,858cr compared to Rs1,490.6cr, which has improved by 24.62%.
  • The priority sector advances of the Bank stood at 52.83% of total advances as against the minimum stipulated target of 40%.
  • The CASA deposits are at 27.99% of total deposits at FY18 end as against 29.04% as on FY17 end.
  • Bank reported strong credit growth of 28% yoy and 6% sequentially to Rs47,252cr. Retail and corporate advances of the bank grew at 9% yoy and 55% yoy respectively. Retail to corporate advances ratio stood at 45: 55 as of FY18 end.
  • Moving ahead management is focusing on housing and vehicle loans under the retail book. On the corporate loan book side, the bank intends to lend to top rated accounts.
  • Deposits of the bank grew by 11% yoy, whereas CASA ratio decreased from 29.04% to 27.99% for the quarter. CD ratio of the bank increased to 75.2% against 65.2% yoy during the quarter.
  • Yield on advances for Q4FY18 was at 9.8% against 10.8% yoy. Cost of deposits dropped to 6.1% during the quarter as against 6.7% in the corresponding period last year.
  • NIM of the bank has improved by 113bps to 3.54% in Q4FY18 against 2.41% yoy and 3.09% sequentially. NIM for FY18 has also improved by 39 bps yoy to 3.18%. Management guided that NIM’s to in ~ 3% in FY19E. 
  • Karnataka bank has not opted as per RBI circular dated April 02, 2018, which permits banks to spread provisioning for MTM losses over four quarters instead it has booked the entire MTM loss on investment during this quarter.
  • The Bank has total 8 A/cs around Rs840cr. which are considered to be NPAs. Out of which 4 A/cs are under NCLT cases, 2 A/cs are under SDR and 2A/cs are under S4A. These accounts are considered to be 100% NPAs.
  • Banks Capital Adequacy Ratio stood as of FY18 end stood at 12.04%. The bank doesn’t intend to raise funds in the short run.
  • Management is targeting to double its balance sheet size in the next 4-5 years.
  • As of FY18 banks total number of branches stood at 800. It plans to add 35 branches during the current year.
  • The bank’s three major focus areas are - credit growth and digitalization.
  • The Capital Adequacy of the Bank under Basel Ill now stands at 12.04% as against 9% minimum as stipulated by RBI.

Technical View:

Karnataka Bank Ltd is currently trading at Rs. 110.75, down by 2 points or 1.77% from its previous closing of Rs. 112.75 on the BSE. The scrip opened at Rs. 114 and has touched a high and low of Rs. 116.35 and Rs. 107.90 respectively. So far 59,94,630 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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