Karnataka Bank Reports Strong Financial Performance in Q1 FY25, Key Indicators Show Positive Trends

Karnataka Bank, a midcap private bank, has recently declared its financial results for the quarter ended June 2024. The bank has shown a positive performance with a score of 11, a significant improvement from -12 in the previous quarter.

One of the key factors contributing to this positive performance is the bank’s Profit Before Tax less Other Income (PBT) which has grown by 292.6% to Rs 239.32 crore, compared to the average PBT of the previous four quarters at Rs 60.95 crore. This indicates a strong near-term trend for PBT.

The bank’s Net Interest Income (NII) has also shown a positive trend, with the highest quarterly income of Rs 903.36 crore and consistent growth in the last five quarters. This indicates an increase in the bank’s core business income.

Another positive aspect is the bank’s Interest Earned, which has also shown consistent growth in the last five quarters, with the highest quarterly income of Rs 2,277.99 crore. This indicates a positive trend in the bank’s sales.

The bank’s Operating Profit (PBDIT) has also shown a positive trend, with the highest quarterly income of Rs 279.58 crore in the last five quarters. This indicates a positive near-term trend for operating profit.

The bank’s Profit After Tax (PAT) has also shown a positive trend, with the highest quarterly income of Rs 400.33 crore in the last five quarters. This indicates a positive near-term trend for PAT, with a growth of 22.6% over the average PAT of the previous four quarters at Rs 326.57 crore.

On the downside, the bank’s Non-Operating Income is 53.83% of its PBT, indicating a high proportion of income from non-business activities. This may not be a sustainable business model in the long run.

The bank’s Net Non-Performing Assets (NPA) have also shown a negative trend, with the highest quarterly value of 1.66% in the last five quarters. This indicates an increase in the proportion of stressed loans given by the bank.

However, the bank’s Cash and Cash Equivalents have shown a positive trend, with the highest half-yearly value of Rs 7,656.07 crore in the last six half-yearly periods. This indicates an improvement in the bank’s short-term liquidity.

Overall, Karnataka Bank has shown a positive financial performance in the quarter ended June 2024, with strong growth in key areas such as PBT, NII, and PAT. However, the bank needs to address the issue of high non-operating income and increasing NPAs to ensure sustainable growth in the long run. Based on these financials, MarketsMOJO has given a ‘Hold’ call for the stock of Karnataka Bank.