- 24 Oct 2024
- ICICI Securities
KARNATAKA BANK REPORTED MIXED Q2FY25 RESULTS
News: Karnataka Bank reported mixed Q2FY25 results, wherein gross advances rose 12.5% YoY (flat QoQ) to ₹75,316 crore. NII growth remained muted at 1.4% YoY and declined 7.7% sequentially, due to 31 bps QoQ dip in NIM to 3.23%. Excluding the impact of one-off IT refund in Q1FY25, NII was up 1.5%. Higher staff cost (9.4% QoQ) offset by lower provisions moderated PAT to ₹336 crore (1.75% YoY) with RoA falling 25 bps QoQ to 1.13%. Focus on asset quality was evident with credit cost falling 8 bps YoY to 0.09% and 33 bps/ 20 bps QoQ improvement in GNPA/ NNPA to 3.21%/ 1.46%. Deposit accretion came at 11.7% YoY (flat QoQ) to ₹99,968 crore, with cost of funds stable at 5.58%.
Views: While the bank delivered on growth front, operational performance remained muted. Strategic shift from low-yielding bulk advances and high-cost deposits impacted profitability. Going ahead, execution of its retail-focused strategy and cost control is seen to aid earnings trend.
Impact: Neutral