Karnataka Bank Shares Surge 20%, Hit Fresh 52-Week High After Net Profit Soars to 228%

Shares of Karnataka Bank today surged as much as 20 per cent and hit a 52-week high on November 2 after the lender posted an all-time high net profit of Rs 411 crore for the September quarter. The stocks were locked in the 20 per cent upper circuit at Rs 112.55 on the BSE.

The bank said the significant jump in net profit is mainly because of improved earnings, improved asset quality, healthy growth of advances, cost containment, and efficiency enhancement among others.

For Q2FY23, the bank’s net interest income increased by 26 per cent year-on-year (YoY) to Rs 803 crore from Rs 637 crore in Q2FY22. The net interest margin improved to 3.56 per cent from 3.15 per cent in the year-ago quarter.

The bank’s asset quality improved further as gross non-performing assets (GNPAs) dropped 67 basis points (bps) on a sequential basis to 3.36 per cent at the end of September quarter. Net NPAs dropped 44 bps sequentially to 1.72 per cent. About a year back, the GNPA was at 4.52 per cent, and NNPA was at 2.85 per cent.

CEO Mahabaleshwara MS attributed the significant jump in net profit to improved earnings, improved asset quality, healthy growth of advances, cost containment, and efficiency enhancement, among others.

“The second quarter is a turning point for Karnataka Bank as our net interest income and margin expanded meaningfully and remain poised for future growth. Our all-time high Q2FY23 result represents the tipping point of the Bank’s reinvigorated trajectory,” he added. The lender is undergoing a transformation to becoming a highly digitally focused bank that has future-ready operations and can outpace market demands.

Commenting on the current earnings season, Axis Securities said: “Overall Q2FY23 earnings have been in line with our expectations so far. While the expectation on the revenue front was largely met, earnings miss was seen in export and commodity themes. The Banking sector held the performance and accounted for most of the incremental growth in the corporate earnings while cyclical sectors including Metals, Cement, and Oil & Gas were the biggest laggards due to lower realization and higher Raw Material costs during the quarter.”

Stock Price

The stock hit an over three-year high, and was trading at its highest level since June 2019. A combined 20.04 million shares have changed hands, and there are pending buy orders for 2.6 million shares on the NSE and BSE.

The lender had reported earnings after markets closed on Tuesday. Year to date, its shares are up over 80 per cent.

Incorporated in 1924, Karnataka Bank Limited has over 8,000 employees and over 800 branches. Major Indian banks have reported strong profit growth in the September quarter as lending improved despite a slew of rate hikes by the central bank to tame high inflation.

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