Private sector lender Karnataka Bank fiscal fourth quarter net profit more than halved due to the higher provisioning.
During the Jan-Mar quarter the lender reported net profit of Rs 27.31 crore, down 56%. It had posted a net profit of Rs 61.73 crore in the same period of the preceding fiscal ended March 2019.
Sequentially, net profit in the three months to March declined significantly from Rs 123.14 crore in the third quarter of FY20.
The bank’s provisions and contingencies for the quarter were raised to Rs 356.50 crore as against Rs 217.73 crore in the corresponding quarter of 2018-19.
Income during the Jan-Mar period of FY20 grew by 18% to Rs 2,079.58 crore from Rs 1,821.88 crore in the same period a year ago.
For the full year 2019-20, Karnataka Bank posted a 9.5% fall in net profit at Rs 431.78 crore from Rs 477. 24 crore in FY19.
Income during the year rose to Rs 7,870.82 crore from Rs 6,907.92 crore. On the assets front, the bad loan proportion saw an increase, with gross non-performing assets (NPAs) rising to 4.82% of the gross advances as on March 31, 2020 from 4.41% in the year-ago period. Net NPAs were also higher at 3.08% from 2.95% earlier.
The provision coverage ratio as on March 31, 2020 stood at 64.70% as against 58.45% in the previous year.
Further, during the Jan-Mar quarter it recognised exposure in respect of 11 entities with outstanding balance of Rs 252.49 crore as fraud and provided for the accounts, in accordance with the RBI norms. The maximum is owed by DHFL at Rs 180.13 crore, followed by Religare Finvest Rs 43.44 crore, Fedders Electric Rs 41.30 crore and Leel Electricals Rs 20.65 crore. In all the referred three non-performing accounts, necessary provisions have been made in full to be spread across four quarters.
The lender has satisfactory capital and adequate liquidity to support its business growth which has moderated due to the Covid-19 pandemic.
Net net we expect weakness in the banks growth strategy in the coming 2-3 quarters ahead in FY21 following the corona virus, bigger pain in SME. Unsecured loans and risk of high asset quality ahead.
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.