Karnataka Bank Ltd's Q3FY18 standalone net profit rises 27.6% yoy to Rs87.40cr; in-line with estimates

India Infoline Research Team | January 30, 2018 14:55 IST

Mangaluru -based major banking institution

Karnataka Bank Ltd Q3FY18

Standalone Results Q3FY18: (Rs. in crore)

Q3FY18 YoY (%)
NII 451.60 19.9
NPA (%) 4 [33]
Provisions 196.40 95.2
Net Profit (adjusted) 87.40 27.6
***NPA change is bps
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Buy

Reco. Price

154

Last updated on

01-Jan-2018

Karnataka Bank’s NII for Q3FY18 improved by 19.9% to Rs451.6cr against Rs376.5cr yoy. The net profit was in-line with estimates, 27.6% to Rs87.4cr against Rs68.5cr yoy. GNPA for Q3FY18 stood at 3.97% against 4.13% qoq. NNPA for the quarter stood at 2.85% against 3.04% qoq. 
  • Gross slippages during the quarter was Rs211cr, management expect slippages to be curtailed going forward as well.
  • Management expects asset quality to improve going ahead, maintaining its FY18 GNPA guidance at 4%.
  • Total stressed asset book has reduced to 8.95% in Q2FY18 from 13.3% in Q3FY17.
  • The bank has exposure to 4 accounts (1 account in 1st list and 3 accounts in 2nd list) wherein the bank has exposure of Rs320cr (treated as NPLs) and has provisions of 27%.
  • It will continue to have elevated credit cost during Q4FY18, which will moderate over period of time.
  • Advances growth of 24%, this has helped CD ratio at 77% (vs. 63% a year ago). Management has entailed loan growth target of 25% for FY18. 
  • Aims to take retail and mid‐corporate segment to 60% and balance 40% from corporate segment.
  • More than 80% of the corporate book is above investment grade.
  • NIMs were 3.09% (vs. 2.84% a year ago). Management expects to maintain NIMs at a similar level.
  • MCLR linked loan book – 58%, Base rate linked – 18%, other: 23%.
  • CASA is 28.23%, growth has been optically lower on higher base, historically the CASA ratio was 23‐24%.
  • Cost/ income ratio has improved to 50.18%, aiming to bring cost/income down to 42‐ 45%.
    .
  • Aiming for RoA of > 1% by FY20E.
  • Plans to take branch expansion to 800 by FY18.
  • 67% of the transaction happening to digital channel. Plans to take this to 80% over period of time.


Technical View:

Karnataka Bank Ltd is currently trading at Rs165, up 1.41% from its previous closing of Rs162.70 on the BSE.
The scrip opened at Rs163 and has touched a high and low of Rs168.90 and Rs160.60 respectively. So far 1,68,57,815 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.



***Note: This is a NSE Chart

 

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