Karnataka Bank Ltd's Q2FY19 standalone net profit rises 19.8% yoy to Rs111.86cr: Misses Estimates

The bank’s standalone NII stood at Rs467.70cr, up 6.24% yoy but down 0.19% qoq.

Oct 17, 2018 09:10 IST India Infoline Research Team

Karnataka Bank Ltd Q2FY19

Standalone Results Q2FY19: ( cr)

Q2FY19 YoY (%)
NII 467.70 6.2
GNPA (%) 4.7 53
Provisions 193.22 [14.5]
Net Profit (adjusted) 111.86 19.8
***GNPA change is bps
Karnataka bank’s Q2FY19 NII has improved by 6.2% yoy to Rs467.7cr as against Rs 440.2cr. Its net profit for the quarter was below consensus estimates at Rs111.8cr against Rs93.4cr yoy due to subdued NII, although up 19.8%. NIM for the quarter declined 18bps yoy to 2.91%. GNPA for Q2FY19 stood at 4.66% against 4.72% qoq, declining by 6bps. NNPA for the quarter came in at 3% against 2.92% qoq, which has increased by 8bps.
  • Advances rose to Rs49,970cr registering a yoy growth of 21.69%
  • Management maintained loan growth guidance of 20% plus for FY19E
  • Deposits of the bank rose to Rs63,885cr registering a yoy growth of 12.95%
  • NIMs at 2.9% the management expect to maintain NIMs of >3% for full year FY19E
  • The management stated that stress in the pipeline, especially in terms of SMA2, MSME dispensation accounts, and restructured advances, has considerably eased
  • The bank has achieved a credit-deposit ratio of 78.22% for the quarter
  • Slippages during the quarter was Rs370cr against Rs270cr in previous quarter
  • The bank has exposure of Rs156cr (0.31% of advances) towards IL&FS group (3 entities) , of which one exposure of Rs30.8cr is classified under SMA-2 account.
  • Exposure towards NBFC- Rs75.5cr, Transportation network – Rs30.8cr (SMA2 accounts) and Energy – Rs50.4cr.
  • The SMA-2 accounts came in at Rs346cr against Rs740cr in Q1FY19 and Rs1340cr as at Q2FY18
  • Management stated that pressure on the stress pipeline is decreasing and expect slippages ratio improvement
  • Credit cost for the quarter was at ~40bps levels.
  • CASA standing at 27.08% against 27.35% in previous quarter. Its expect to achieve CASA ratio of 30% plus over next 2-3 years

Technical View:

Karnataka Bank Ltd ended at Rs. 98.35, down by 0 points or 0% from its previous closing of Rs. 98.35 on the BSE.
The scrip opened at Rs. 101.95 and touched a high and low of Rs. 107 and Rs. 96.40 respectively. A total of 2,16,78,559 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.

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