KTKBANKNSEQ1FY26August 21, 2025

The Karnataka Bank Limited

9,392words
133turns
13analyst exchanges
1executives
Management on call
Raghavendra S. Bhat
MANAGING DIRECTOR &
Key numbers — 40 extracted
Rs. 1,77,509 crore
erm objectives. Let me present the business highlights. Aggregate business of the Bank stood at Rs. 1,77,509 crores, marginally up by 1.1% on a year-on- year basis as against Rs. 1,75,535 crores in June 2024. Pr
1.1%
usiness highlights. Aggregate business of the Bank stood at Rs. 1,77,509 crores, marginally up by 1.1% on a year-on- year basis as against Rs. 1,75,535 crores in June 2024. Profit after tax Q1 FY '26
Rs. 1,75,535 crore
f the Bank stood at Rs. 1,77,509 crores, marginally up by 1.1% on a year-on- year basis as against Rs. 1,75,535 crores in June 2024. Profit after tax Q1 FY '26, PAT of Rs. 292.40 crores as against Rs. 252.37 crores
Rs. 292.40 crore
r-on- year basis as against Rs. 1,75,535 crores in June 2024. Profit after tax Q1 FY '26, PAT of Rs. 292.40 crores as against Rs. 252.37 crores in Q4 of FY '25, quarter-on-quarter increase of 15.8%. Y-o-Y, there
Rs. 252.37 crore
Rs. 1,75,535 crores in June 2024. Profit after tax Q1 FY '26, PAT of Rs. 292.40 crores as against Rs. 252.37 crores in Q4 of FY '25, quarter-on-quarter increase of 15.8%. Y-o-Y, there is a decrease in PAT from th
15.8%
of Rs. 292.40 crores as against Rs. 252.37 crores in Q4 of FY '25, quarter-on-quarter increase of 15.8%. Y-o-Y, there is a decrease in PAT from that of Rs. 400.33 crores in Q1 FY '25. However, it shoul
Rs. 400.33 crore
4 of FY '25, quarter-on-quarter increase of 15.8%. Y-o-Y, there is a decrease in PAT from that of Rs. 400.33 crores in Q1 FY '25. However, it should be noted that in Q1 FY '25 last year, the Bank had received an
Rs. 81.32 crore
ever, it should be noted that in Q1 FY '25 last year, the Bank had received an interest income of Rs. 81.32 crores on tax refund, because of which it is not directly comparable. Further, in line with
Rs. 74,267.02 crore
to increase PCR, the Bank has continued making accelerated provisioning. Gross advances stood at Rs. 74,267.02 crores as on 30th June 2025, reflecting a Y-o-Y de-growth of 1.6% from Rs. 75,455 crores as on 30th Jun
1.6%
ross advances stood at Rs. 74,267.02 crores as on 30th June 2025, reflecting a Y-o-Y de-growth of 1.6% from Rs. 75,455 crores as on 30th June 2024. Our overall strategy is to continue to focus on grow
Rs. 75,455 crore
ces stood at Rs. 74,267.02 crores as on 30th June 2025, reflecting a Y-o-Y de-growth of 1.6% from Rs. 75,455 crores as on 30th June 2024. Our overall strategy is to continue to focus on growing Retail, Agri and M
Rs. 2,327 crore
where the growth was led by Retail, Housing and gold loan portfolio with a net book accretion of Rs. 2,327 crores Y- o-Y in the RAM segment. The Bank has been committed to reducing its exposure to low-yielding
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Guidance — 20 items
Raghavendra S. Bhat
opening
“As the Bank has excess liquidity and considering the CRR cut, the Bank’s strategy will be to restrain itself from accepting costly bulk deposits.”
Raghavendra S. Bhat
opening
“Our focused new product development and launches continue to be on track to fill in some remaining gaps in our product offerings.”
Raghavendra S. Bhat
opening
“With the improved focus on higher yielding retail and direct-to-corporate advances combined with expected easing in cost of funds, we expect NIM to further improve by 10 basis points by the end of the year.”
Raghavendra S. Bhat
opening
“Considering the potential churn to higher yielding segments, we expect to see an improvement of 20 to 30 basis points in the overall portfolio during the second half of the year.”
Raghavendra S. Bhat
opening
“These recoveries will be reflected in the results of the next quarter, and we should see improvement in the asset quality resuming again.”
Raghavendra S. Bhat
opening
“Liquidity coverage ratio as on 30th June 2025 at 200.7%, significantly improved from 162.5% as on 31st March 2025 and as against the statutory target requirement of 100%.”
Raghavendra S. Bhat
opening
“We expect to end FY ‘26 with an ROA between 1.1% to 1.2%.”
Raghavendra S. Bhat
opening
“We expect improvement in ROA and ROE in the coming quarters in FY ‘26 supported by accretion in the higher-yielding RAM segment and movement from bulk to retail deposits, leading to improvement in NII, an increase in other income and consequent improvement in profit after tax.”
Raghavendra S. Bhat
qa
“Also, the key focused areas will be Growth in advances is the prime objective of mine and my team and growth in CASA; these are the two main areas which we are focusing on and since it is already August, I don't want to change any annual action plans at this juncture.”
Priyank
qa
“How do we plan to address this, the falling NIMs?”
Risks & concerns — 8 flagged
While gross interest income has remained flat during this period, owing to a reduction in overall yields, the increased cost of funds and cost of deposits has put pressure on overall NII on a Y-o-Y basis.
— Raghavendra S. Bhat
Number two, with regard to the NPA, you have a concern.
— Raghavendra S. Bhat
Even my predecessors also and even my priority is also to control the NPA, recovery and controlling of stress.
— Raghavendra S. Bhat
That is why there is pressure on the spread or NIM.
— Raghavendra S. Bhat
Unless and until growth happens, this pressure on NIM will not yield results.
— Raghavendra S. Bhat
Is it what the NPA, the GNPA and the NNPA, the stress that we have shown, is it all?
— Manish Dhariwal
There is no concern, absolutely, for whatever you have.
— Raghavendra S. Bhat
I assure you that there is no such concern at all.
— Raghavendra S. Bhat
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Q&A — 13 exchanges
Q
Hi, team. Thank you for the opportunity and for a very good performance in such challenging times. So, my question first is on, of course, with the given leadership transition that we are witnessing, and I am glad to see the long-term targets remaining intact, what are the near-term key targets that Bank looks to further change or implement for a betterment of good, say, that there may be some differences in terms of the earlier leadership versus the current leadership? What are the key operating KPIs that the Board would be judging going ahead or targeting in the near term?
Raghavendra S. Bhat
Now, as far as growth is concerned, no doubt about it, we had some tough times. We have to face the tough times ahead. Also, the key focused areas will be Growth in advances is the prime objective of mine and my team and growth in CASA; these are the two main areas which we are focusing on and since it is already August, I don't want to change any annual action plans at this juncture. But wherever corrections are required in between, we will definitely review them, and we will come back. My second question is on the cost of deposits in the era where the large private banks have increased their
Q
Good morning. Thank you very much, sir, for giving me an opportunity. Let me first welcome you to your new avatar, and I am sure that now things will be smoothened out. We have undergone turbulence for the last quarter, as all of us know. Sir, the 1st Quarter results are out, and what I see is that profit, no doubt, quarter-to-quarter has 15% to 16% gone up to Rs. 292 crores, but year-on-year we find a lot of fall from Rs. 400 crores to Rs. 292 crores, almost 27% down. That is one of my concerns. And second thing, when I see the NPAs, of course, you have a very eminent Board, you have eminent
Raghavendra S. Bhat
Yes, with regard to the reduction in net profit, we also have the same concerns about how to address that. But compared to Q1 of last year, one specific item of IT refund around Rs. 81.32 crores was there during Q1 of last year and of course, these are all reasons, ultimately net profit has gone down. That is a different issue, but there is one such item. It was Rs. 81.32 crores refund of IT is there. That is number one. Number two, with regard to the NPA, you have a concern. We too also have the concern. Even my predecessors also and even my priority is also to control the NPA, recovery and c
Q
Congratulation on being the Managing Director of the Bank. As the new Managing Director, going forward, what will be the key focus areas for the Bank?
Raghavendra S. Bhat
Yes, I thank you. Good morning, Mayank. Thank you for your question. I have already highlighted rather my main focus is growth, quality growth, particularly growth in liability side CASA, asset side retail,and MSME. These are the focused area to have. One is on the liability side growth is to control cost. Other side is have better yield so that there is an improvement in the margin. That is it for the day.
Q
Good morning. Thank you.
Yaswanth Thippeswamy
I mean, I understand that you worked with this Bank for quite some time and now you understand the culture. I think it would be nice, I mean, I would rather not question what has happened because you were not directly responsible for the last quarter's performance. Rather from the presentation that has been shared, I have a couple of questions. So, one is with respect to the asset quality. So, I see that there is an addition of Rs. 400 crores, and I just wanted to know which are the sector or what are the number of accounts that contributed to this addition? And also have you provided for this
Q
In your earlier remarks, you mentioned about the quality growth and focus on RAM. When I look at the numbers, the RAM segment has grown at 5%. and the non-RAM segment, whether it is corporate or NBFC and all, that has de-grown which has resulted into minus 1.6% de-growth for the quarter on a year-on-year basis. So, I just want to understand that incrementally, let's say, now we have this segment as the primary focus or a growth driver, for this year, like what is your guidance? How much will this RAM segment grow to? And accounting for the de-growth in other segments, what will be the overall
Raghavendra S. Bhat
Yes, the retail gross advances, as you know, it is furnished, total advances of Rs. 74,267 crores is there. Out of that retail advances Rs. 44029 crores. We want to take it at least to Rs. 51,000 crores by the end of FY '26. There is no doubt that it is a very ambitious target. We have to do that to stabilize the growth in advances. As I mentioned earlier, it is a combination of Agri, MSME and other Retail. We have plans to take it from ~44,000 to ~51,000 around Rs. 7000 crores has to happen in retail. And one more area, no doubt it is coming under that, last year we had grown particularly und
Q
Sure.
Raghavendra S. Bhat
If you have got more queries, definitely we will be, whatever you want particulars, you please send a mail to us. We will come back to you. I will do that.
Q
Good morning, Mr. Bhat, and congratulations.
Raghavendra S. Bhat
Good morning. Good morning, sir. Best wishes to your Karnataka Bank going forward. Thank you. Sir, sharing a couple of observations, sir. Recently observed and even in the past, private banks have been onboarding their wholesale strategy where corporates, large corporates end up being anchors where, of course, there is a tight pricing to enter this relationship, but they take advantage of or they leverage that relationship across the corporate anchors - entire vendor chain, distributor, dealer financing. So, they are trade products. Again, sharing this observation. Second observation is that r
Q
So, Sir, like just going slightly into the past, so, like you know, there are a couple of developments that happened and the product design and wholesale vertical head also left. So, what actually happened? What went wrong all of a sudden, apart from the MD and ED exiting from the system? Because the shareholders and the investor at large would like to know what is actually happening.
Raghavendra S. Bhat
No, see, anyone leaving the organization is dependent upon their personal choice, but as long as they are here, they have trained a sufficient number of people. Backup people are there, and you are talking about wholesale. The wholesale vertical head and the product design head. Yes, the wholesale vertical head, other retail head is also there to tide over the situation. We have made alternative arrangements for that also and a sufficient backup plan is also there. We are working in that direction. There is no concern for that. In all the departments, the second line is from the in- house tale
Q
Good afternoon, sir.
Raghavendra S. Bhat
Good afternoon, Sarvesh. Sir, the first question is basically dwelling on these growth numbers in advances. So, I can understand that there are some challenges with high cost or low yield corporate advances, which you might have pruned down. But on the RAM side itself, Sir, the growth of 5% is possibly the lowest amongst all the banks and including even the PSU banks and MSME book de-growing, that itself is something that we have not seen across the sectors. So, before we think about advances growth in the coming year, have we been able to identify? And this is after recruiting so many people,
Q
So, my first question was on the RAM disbursements. What would be our yield on the incremental RAM disbursements that we did this quarter?
Raghavendra S. Bhat
One second. Good morning, Darshan. One second. It is somewhere between 8.5 to 9.25. RAM is at 9.5 to be precise. 9.5 is the incremental yield for this quarter. No, no. As of now. On the portfolio, you are saying, right? 9.25 to 9.5. Yes. No, you are saying that is what you are offering now to customers, or is that what you have lent out for this quarter, or is this the portfolio yield? I am mentioning about the average. It is portfolio yield I am telling you. It depends upon various factors like rating and all. We will try to maintain it between 9 to 9.5. So, then at 9 to 9.5, it is not much d
Q
Good morning, Manish.
Manish Dhariwal
Yes. Very good morning, Mr. Bhat, and our compliments to you on taking over as the leader of this century-old Bank, and we wish you all the best in your efforts to grow the Bank to bigger heights and greater heights. Sir, in fact, my fellow participants have also touched upon this, but one good statement from your side would be very helpful. We have had a turbulent recent quarter wherein the leadership team either went on its own or they had to go or whatever. But what has been the impact on the Bank? Is there any hidden liability? Is there any hidden bomb in the books in terms of the bad asse
Q
As I told earlier, my priorities I have already set, and I will be moving in that direction, taking my team along with me and on the one side, I am looking forward to the cooperation from our time- tested customers. Time-tested customers along with their reference, the additional growth in liabilities and assets, as, also fresh acquisitions of liability customers as well as asset customers. Growth and quality are the two important aspects, followed by working with a clear mind with regard to the spread, or taking into account all these aspects, we will be moving forward. Thank you very much to
Management
Q
Thank you very much.
Management
Speaking time
Raghavendra S. Bhat
59
Moderator
14
Darshan Deora
12
Chirag Singhal
11
Priyank
8
Manish Dhariwal
8
Unmesh Kantilal Shah
6
Jayen Shah
5
Sarvesh Gupta
5
Mayank Gupta
2
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Opening remarks
Raghavendra S. Bhat
Thank you. Good morning to all, and a very warm welcome to our Earnings Call for Q1 of FY '26. Based on the feedback from last quarter's Earnings Call, we have decided to shift the timing of our earnings calls. This was done in a bid to provide sufficient time for our investors to go through our financial results and investor presentation, both of which have been uploaded post the conclusion of our Board meeting yesterday. On a more personal note, after having spent more than 38 years across multiple divisions at Karnataka Bank, I have been given the opportunity of a second inning to lead the Bank in unlocking the immense potential that this organization has. Hence, it gives me great pleasure to participate in this Earnings Call to convey our vision for the future of the Bank and interact with you all who are one of the most important stakeholders in the growth of this organization. As many of you would be aware, the 1st Quarter of FY '26 has been a period of significant transitions fo
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