Private sector Karnataka Bank on Tuesday reported a nearly 13 percent rise in net profit at Rs 119.44 crore for the September quarter as bad loans moderated. The bank had posted a net profit of Rs 105.91 crore in the July-September period of the previous fiscal.

Total income rose to Rs 1,933.52 crore in the quarter under review, against Rs 1,902.41 crore in the same period of 2019-20, Karnataka Bank said in a regulatory filing. However, the interest income fell to Rs 1,603.71 crore from Rs 1,629.64 crore a year ago. Income from other sources rose to Rs 329.81 crore from Rs 272.77 crore.

The lender witnessed an improvement on the asset quality front, as the gross non-performing assets (NPAs) fell to 3.97 percent of the gross advances as on September 30, 2020, from 4.78 percent in the year-ago period.

In value terms, the gross NPAs were down to Rs 2,188.80 crore from Rs 2,594.27 crore. Net NPAs or bad loans fell to 2.21 percent (Rs 1,194.60 crore) from 3.48 percent (Rs 1,863.11 crore).

However, provisions for bad loans and contingencies were raised to Rs 322.13 crore for the September quarter of 2020-21, as compared to Rs 262.40 crore in Q2 FY20. With regards to provision requirement of 10 percent against moratorium availing accounts due to the COVID-19 impact, Karnataka Bank said it provided Rs 24.08 crore on such loans for the March 2020 quarter, and Rs 73.91 crore for the June quarter. The aggregate COVID-19 provision of Rs 97.99 crore has been continued for the period ending September 30, 2020, it added.

The bank has been able to keep the bottom line intact with steady growth in net profit, improve the asset quality significantly and gross and net NPAs decreased to 3.97 percent and 2.21 percent respectively, the lender's Managing Director and CEO Mahabaleshwara M S said.

Further, the provision coverage ratio has reached an all-time high of 75.44 percent on account of accelerated prudent provisioning.

The bank has been successful in weathering the impact of COVID-19 as the retail and mid-corporate advances have grown at 8.53 percent and 16.52 percent, respectively, and share of CASA (current and savings account) deposits also rose to 29.17 percent of total deposits, he said.

"Bank has now started reaping the benefits of 'KBL VIKAAS', its transformation exercise and there is a significant improvement in all the fundamental parameters including the NIM (net interest margin) which rose to 3.08 percent during the current quarter and CAR (Capital Adequacy Ratio) continuing at 13.08 percent.

"Going forward Bank is confident of continuing the consistent and sustainable performance," Mahabaleshwara said. Stock of Karnataka Bank closed at Rs 42 apiece on BSE, up 0.24 percent from its previous close.

First Published:Oct 14, 2020 10:06 AM IST