Karnataka Bank Q4 net profit falls by 56% as provisions and contingencies prepare for bad loans

Karnataka Bank has reported a 56 per cent decline in net profit for the March quarter at Rs 27.31 crore due to higher provisions. The private sector lender had posted a net profit of Rs 61.73 crore in the same period of the preceding fiscal ended March 2019, it said in a regulatory filing.

Sequentially, net profit in the three months to March declined significantly from Rs 123.14 crore in the third quarter of FY20.

The bank's provisions and contingencies for the quarter were raised to Rs 356.50 crore as against Rs 217.73 crore in the corresponding quarter of 2018-19.

Income during the January-March period of FY20 grew by 18 per cent to Rs 2,079.58 crore from Rs 1,821.88 crore in the same period a year ago, it said.

For the full year 2019-20, Karnataka Bank posted a 9.5 per cent fall in net profit at Rs 431.78 crore from Rs 477. 24 crore in FY19.

Income during the year rose to Rs 7,870.82 crore from Rs 6,907.92 crore.

On the assets front, the bad loan proportion saw an increase, with gross non-performing assets (NPAs) rising to 4.82 per cent of the gross advances as on March 31, 2020 from 4.41 per cent in the year-ago period.

Net NPAs were also higher at 3.08 per cent from 2.95 per cent earlier.

Karnataka Bank said in accordance with RBI guidelines on the COVID-19 pandemic, it has not recommended any dividend for the year 2019-20. Dividend payout in the previous year stood at 35 per cent (Rs 3.50 per equity share).

The provision coverage ratio as on March 31, 2020 stood at 64.70 per cent as against 58.45 per cent in the previous year.

Further, during the March quarter it recognised exposure in respect of 11 entities with outstanding balance of Rs 252.49 crore as fraud and provided for the accounts, in accordance with the RBI norms.

On the lockdown impact, the bank said it has satisfactory capital and adequate liquidity to support its business growth which has moderated due to the COVID-19 pandemic.