Karnataka Bank drops after weak Q4 outcome

However, the corresponding previous year figures are not directly comparable due to changes in accounting policy for investments (as per master direction issued by RBI) since April 2024. Had the bank continued to follow the earlier accounting policy, profit before tax would have been higher by Rs 147.51 crore. Excluding the impact of the above and the additional actuarial estimates for retirement benefits of Rs 113 crore, the adjusted profit after tax of the bank would have been Rs 372 crore for Q4 FY25 (Y-o-Y growth of 35.6%).

The bank's total income rose 2.55% YoY to Rs 2,686.69 crore in Q4 FY25. Net interest income fell 6.40% YoY to Rs 780.68 crore in Q4 FY25. Net interest margin stood at 2.98% in Q4 FY25 as against 3.32% in Q4 FY24.

The bank said that it made notable improvements in its three primary objectives of expanding the distribution network, improving the quality of asset book and working towards improving financial metrics.

In Q4 FY25, the bank's aggregate deposits stood at Rs 1,04,807.49 crore registering YoY growth of 6.96%, while gross advances stood at Rs 77,958.72 crore registering YoY growth of 6.79%. CASA deposits grew by 6.35%, from Rs 31,293 crore as on 31 st March 2024 to Rs 33,281 crore as on 31 March 2025, a net accretion of Rs 1,988 crore. CASA ratio (%) fell to 31.75% in Q4 FY25, down 19 bps as against 31.94% in Q4 FY24.

The asset quality has improved during FY'24-25 with GNPA % declining by 45 bps to 3.08% from 3.53% as compared to March 2024. Similarly, the NNPA% also declined by 27 bps to 1.31 % from 1.58% as compared to March 2024. The PCR has improved to 81.42% in March 2025 (from 79.22% in March 2024). The bank is comfortably capitalized with a CRAR of 19.85%.

The bank posted a net profit for the full year 2024-25 of Rs 1,272.37 crore, as against Rs 1,306.28 crore earned during the corresponding period previous year, a decline (Y-o-Y) of 2.60%. Total income rose 6.92% YoY to Rs 10,283.12 crore in FY25.

The bank's board has recomended a dividend of Rs 5 per equity share for the financial year ended 31 March 2025.

Srikrishnan H, managing director & CEO of the bank said Kamataka Bank's focus in developing retail, mid-market and direct-to-corporate lending businesses is picking up steam as reflected in the book growth during the last few quarters. The bank is well-positioned on the liability franchise, digital and branch-led distribution. Based on sound financial parameters achieved during the year, substantial improvement in the book quality and improved technology platforms and processes, the outlook for FY'25-26 looks very promising.

Sekhar Rao, executive director of the bank, reflecting on the bank's performance stated, FY25 was a year marked by macroeconomic headwinds, tightening liquidity, and pressure on Net Interest Margins (NIMs). Despite these, we demonstrated resilience and adaptability, delivering a stable performance and reinforcing our strategic priorities. A key driver of our progress this year was our increased focus on the retail segment. By deepening customer engagement, expanding digital offerings, and tailoring financial products to meet evolving household and small business needs, we achieved healthy growth in retail advances and improved portfolio diversification. Looking ahead, we believe our sharpened focus on retail banking, combined with a robust digital backbone and customer-centric approach, positions us well for sustained, inclusive growth. We thank all our stakeholders for their continued trust and support.

Karnataka Bank, a leading 'A' Class Scheduled Commercial Bank in India, was incorporated on 18th February 1924 at Mangaluru.

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