KTKBANKNSEQ2 FY 2025-26November 15, 2025

The Karnataka Bank Limited

7,590words
67turns
7analyst exchanges
11executives
Management on call
Raghavendra S. Bhat
MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER
Vijayakumar P.H.
CHIEF FINANCIAL OFFICER
Raja B.S.
CHIEF OPERATING OFFICER
Raghuram H.S.
CHIEF RISK OFFICER
Vinaya Bhat P.J.
CHIEF COMPLIANCE OFFICER
Jayanagaraja Rao S.
HEAD OF INSPECTION AND AUDIT AND INTERNAL AUDIT
Niranjankumar R.
CHIEF HUMAN RESOURCE OFFICER AND HEAD BRANCH BANKING DEPARTMENT
Nagaraja Upadhyaya B.
HEAD CREDIT SANCTIONS DEPARTMENT
Chandrashekara G.
HEAD CREDIT OF SANCTIONS DEPARTMENT
Sham K.
COMPANY SECRETARY AND HEAD OF OPERATIONS DEPARTMENT
Sreedhar S.
HEAD OF CREDIT MONITORING DEPARTMENT
Key numbers — 40 extracted
rs,
al excellence and strategic execution aligned with our long- term goals. Before diving into numbers, let me emphasize that our approach this quarter was guided by 3 priorities: enhancing retail and M
INR1,76,461 crore
d operational efficiency. Let me now present the business highlights. Aggregate business stood at INR1,76,461 crores as of September 30, 2025, marginally down by 0.6% Q-on-Q from INR1,77,509 crores in June 2025. W
0.6%
ghts. Aggregate business stood at INR1,76,461 crores as of September 30, 2025, marginally down by 0.6% Q-on-Q from INR1,77,509 crores in June 2025. While this reflects a temporary slowdown, it is alig
INR1,77,509 crore
usiness stood at INR1,76,461 crores as of September 30, 2025, marginally down by 0.6% Q-on-Q from INR1,77,509 crores in June 2025. While this reflects a temporary slowdown, it is aligned with our strategic shift t
INR319.12 crore
our strategic shift towards quality over quantity. Regarding, Profit After Tax, Q2 FY '26 PAT of INR319.12 crores as against INR292.40 crores in Q1 FY '26. Q-on-Q increase of 9.1%. Y-o-Y, there is a decrease in
INR292.40 crore
quality over quantity. Regarding, Profit After Tax, Q2 FY '26 PAT of INR319.12 crores as against INR292.40 crores in Q1 FY '26. Q-on-Q increase of 9.1%. Y-o-Y, there is a decrease in PAT from that of INR336.07
9.1%
x, Q2 FY '26 PAT of INR319.12 crores as against INR292.40 crores in Q1 FY '26. Q-on-Q increase of 9.1%. Y-o-Y, there is a decrease in PAT from that of INR336.07 crores in Q2 of FY '25. Further, in lin
INR336.07 crore
2.40 crores in Q1 FY '26. Q-on-Q increase of 9.1%. Y-o-Y, there is a decrease in PAT from that of INR336.07 crores in Q2 of FY '25. Further, in line with the bank's commitment to increase PCR, the bank has conti
60.22%
rease PCR, the bank has continued making accelerated provisioning and the PCR presently stands at 60.22% excluding technically written- off accounts. Gross advances stood at INR73,644 crores as on 30th
INR73,644 crore
presently stands at 60.22% excluding technically written- off accounts. Gross advances stood at INR73,644 crores as on 30th September 2025, reflecting a Q-on-Q degrowth of 0.8% from INR74,267 crores as on 30th
0.8%
oss advances stood at INR73,644 crores as on 30th September 2025, reflecting a Q-on-Q degrowth of 0.8% from INR74,267 crores as on 30th June 2025. Our overall strategy is to continue to focus on growi
INR74,267 crore
es stood at INR73,644 crores as on 30th September 2025, reflecting a Q-on-Q degrowth of 0.8% from INR74,267 crores as on 30th June 2025. Our overall strategy is to continue to focus on growing Retail, Agri and M
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Guidance — 20 items
Raghavendra S. Bhat
opening
“Thus, as we move forward, we will be continuing the strategy to accelerate retail growth while also stabilizing our mid-corporate and large corporate portfolio with good quality and better yielding loans.”
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
“Considering the potential churn to higher-yielding segments, we expect to see an improvement in the overall portfolio during the second half of the year.”
Raghavendra S. Bhat
opening
“Liquidity coverage ratio as on 30th September 2025 stood at 188.16% against 200.72% as on 30th June 2025, and as against the statutory target of 100%.”
Raghavendra S. Bhat
opening
“We expect to end the year with the 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, increase in other income and consequent improvement in PAT.”
Raghavendra S. Bhat
opening
“We expect to see steady improvement in margins, profitability and return ratios as we move forward.”
Raghavendra S. Bhat
opening
“We remain confident that FY '26 will be a year of transformation and acceleration, and we look forward to sharing even stronger results in the quarters ahead.”
Sushil C. Choksey
qa
“Sir, my couple of questions is for your guidance for the full year or maybe next 1 year basis.”
Raghavendra S. Bhat
qa
“Minimum CD ratio, our aim is to take it to 80%, but it maybe very aggressive target.”
Risks & concerns — 8 flagged
While this reflects a temporary slowdown, it is aligned with our strategic shift towards quality over quantity.
— Raghavendra S. Bhat
Though the cost of deposits and cost of funds have reduced, the fall in yield on advances has put a pressure on our overall NII on a Q-on-Q basis.
— Raghavendra S. Bhat
But the fall in yield on advances has put a pressure on our overall NII on a Q-on-Q basis, which in turn has adversely affected the cost to income for the quarter.
— Raghavendra S. Bhat
So all these issues what we have perceived and it is really a challenge for us.
— Raghavendra S. Bhat
Do we need more digital capability or human resource or execution capability is our internal challenge.
— Sushil C. Choksey
And you must have seen the stress level also coming down, SMA also coming down.
— Raghavendra S. Bhat
Why I'm telling this is, this 2 or 5 months remaining is a challenge for us.
— Raghavendra S. Bhat
Along with the challenge, we have to put our best efforts.
— Raghavendra S. Bhat
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Q&A — 7 exchanges
Q
Happy to see the stable balance sheet. What is the future plans for growth in the Bank? We observe you have a good capital adequacy in the system also.
Raghavendra S. Bhat
Rajesh, as I mentioned earlier also, now also I stand by my word that our focus is only on RAM, that is Retail, Agri and MSME. This no doubt will help us in building further stronger balance sheet. Therefore, I'm confident that we will further expand our area in those sections. Secondly, the gold loan portfolio, as I was mentioning earlier also, under this RAM, gold loan also is an important area. Last year also, it has contributed well. This year also, we are focusing on that. In between, some guidelines have come that made us go a little slow, because we have to comply all the requirements a
Q
Congratulations to team Karnataka Bank for stable numbers in very much challenging time at your team level and management level. Sir, my couple of questions is for your guidance for the full year or maybe next 1 year basis. What is estimated growth on credit, ROA, ROE, NIM, RAM to corporate advances and cost to income?
Raghavendra S. Bhat
Mr. Choksey, you have asked all questions put together simultaneously. Because as a team, we are also working on that system because we are all focusing on increasing the CD ratio. The CD ratio as of last September or even for the month of March, for the financial year ended March, it was 75%. It has dropped to 71% plus as of today. For various reasons, the CD ratio has dropped. Now we are focusing to improve the CD ratio. Minimum CD ratio, our aim is to take it to 80%, but it maybe very aggressive target. But unless and until we increase our CD ratio to that level, as I mentioned earlier also
Q
This is Priyank from Vallum. Sir, good to connect again, but let me focus back before getting into the specific numbers. My question is you have started this responsibility at the stage where the ship was not at all stable. My question is that is the stability around us, is everyone now single-headedly focused on the growth which you are sharing with us? Because at least in the month of October or in the recent months, I do find a lot of notifications coming out around the resignations of the senior leadership. So my first question to the Board is, is the leadership stable now? Are everyone ri
Raghavendra S. Bhat
Good afternoon, Priyank. Yes, these challenges are also there, no doubt about it. But as I have mentioned during my visit to Mumbai, the management is always on the right track, taking adequate steps to handle this type of eventuality. And the people who have come and joined Karnataka Bank, along with them, the top management under DGM cadre and all, they have been posted with the sole objective and idea of transforming those ideas or experience to the second line. These resignations or whatever is not a threat to the bank. I'm confirming that to you. Because the transformation and experience
Q
So sir, first question is on the cost to income. Now earlier, if I see FY '23, '24, we were averaging around 50-odd percent on the cost to income. Then under the erstwhile management, there was a lot of hiring to promote growth in the loan book, which never happened actually. So now that you have taken over, what are these excess costs that you see in the system which can be taken out? If you can quantify a little bit on that, because we are also seeing a lot of employee resignations. We are seeing employee cost coming down this quarter, although other opex has gone up. So what is our path on
Raghavendra S. Bhat
Yes. See, this cost-to-income ratio also is the derivative of our main other income like CD ratio when it improves, one that is direct hit here also. If it is improved, this will come down, number one. Number two, it does not mean that we have totally lost focus on controlling the expenditure. Other expenditures, Karnataka Bank Limited November 10, 2025 if you analyze whatever is published, there is a reduction in other expenditure also, which is under control. Number three, normally, during the first quarter, this cost-to-income ratio will be slightly on the higher side also, still we have co
Q
Congratulations on a good set of numbers under the circumstances. I hope you're well. Sir, I don't have anything on the numbers. It is there for everybody to see. So you would see, everybody else in the call previously has also cited only one thing that vis-a-vis all our peers, our bank has not been taken with seriousness or the numbers have been applauded by the industry or any of the investors, which is a very worrying sign. I have been a shareholder for more than 8 years, and I would say that the FD return of the bank has been better than the shareholder return. And any other bank which was
Raghavendra S. Bhat
Yes. The situation at present, because there is excess liquidity in the market, the rate of interest on deposit, no doubt, it is less. But coming to our profitability, yes as far as profitability is concerned, it is flat. And we really want to build a stable portfolio which gives us better yield. Ultimately, main business, you are aware, you are quite experienced in the market also, main business of banking is accepting and lending. There we have to have the full control. Ultimately, we have to earn. To earn, we have to build a credit portfolio. Whatever it is there now, the base figure, I can
Q
Sir, my only question is that last time, I guess, 1 month back, RBI had granted an extension to fill a position for the new CEO. Is there any update on that end, sir?
Raghavendra S. Bhat
Yes, Board has taken a call and Board has recommended the panel of names also to the regulator. It may come any time.
Q
Yes. Good evening, everyone. And as I mentioned earlier, thank you very much. Investors are our strength and supporting us from the beginning all along as long-term investors. It is our duty to bounce back and meet their expectation also. With that, as I mentioned earlier also, at the cost of repeating, I'm telling you that our growth mantra is to grow in credit first, quality growth in liability side also, CASA, and ultimately to aim at NIM or ROA or controlling the cost to income and working within the framework Karnataka Bank Limited November 10, 2025 of the regulator, duly complying all th
Management
Speaking time
Raghavendra S. Bhat
27
Priyank
13
Moderator
9
Sushil C. Choksey
6
Vijayakumar P.H.
4
Sarvesh Gupta
3
Pranay Dhelia
3
Rajesh Kamat
1
Pratik Jain
1
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Opening remarks
Raghavendra S. Bhat
Good evening, everyone and thank you for joining Karnataka Bank's Q2 of FY '26 Earnings Call. It is always a privilege to connect with our valued investors and stakeholders. Today, we will review the bank's performance for the quarter ended September 30, 2025, share key financial highlights and provide insights into our strategic direction for the coming quarters. In line with our previous quarter's earnings calls, we have allowed our investors ample time to go through the financial results and investor presentation, both of which have been uploaded post the conclusion of our Board Meeting held on 08th November, 2025. As you know, the first quarter of FY '26 was a period of significant transition for the bank. This quarter marks my first full quarter as Managing Director and CEO, and I am pleased to report that we have made steady progress in executing our strategy. As we moved into the second quarter, the bank continued its journey with a business-as-usual approach, building on the mo
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