KARNATAKA BANK 2023-24 Annual Report Analysis

Wed, 21 Aug

KARNATAKA BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

KARNATAKA BANK Income Statement Analysis

• Interest income during the year rose 14.9% on a year-on-year (YoY) basis.
• Interest expenses were up by 23.9% YoY during the same period.
• Operating expenses increased by 24.6% YoY during the year.
• The bank's net interest income (NII) increased by 3.6% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 3.4% in FY24 as against 3.8% in FY23.
• Other income increased by 32.9% YoY during the year.
• Net profit for the year increased by 10.8% YoY.
• Net profit margins during the year declined to 15.7% in FY24 from 16.3% in FY23.

KARNATAKA BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	72,202	82,985	14.9%
Other Income	Rs m	9,926	13,190	32.9%
Interest Expense	Rs m	40,351	49,998	23.9%
Net Interest Income	Rs m	31,851	32,987	3.6%
Operating Expense	Rs m	19,700	24,542	24.6%
Pre-provision Operating Profit	Rs m	22,077	21,636	-2.0%
Provisions & Contingencies	Rs m	10,280	8,569	-16.6%
Profit before tax	Rs m	14,405	15,631	8.5%
Tax	Rs m	2,608	2,565	-1.7%
Profit after tax	Rs m	11,797	13,066	10.8%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.8	3.4
Net profit margin	%	16.3	15.7

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KARNATAKA BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 980.6 bn as compared to Rs 873.7 bn in FY23, thereby witnessing an increase of 12.2%.
• Advances for the year stood at Rs 715.1 bn as compared to Rs 599.5 bn during FY23, a rise of 19.3%.
• Cost of deposits for KARNATAKA BANK rose 12.5% and stood at 4.9%, while yield on advances fell to 9.1%.
• The lender's investments rose to Rs 243.0 bn during the year from Rs 233.2 bn in FY23.
• Borrowing stood at Rs 44.0 bn, a growth of 181.5% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 1,160.8 bn as against Rs 990.6 bn during FY23, thereby witnessing a rise of 17.2%.

KARNATAKA BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	82,120	108,466	32.1%
Advances	Rs m	599,516	715,086	19.3%
Deposits	Rs m	873,679	980,572	12.2%
Yield on advances	%	9.3	9.1
Cost of Deposits	%	4.3	4.9
Investments	Rs m	233,249	243,003	4.2%
Borrowings	Rs m	15,627	43,995	181.5%
Total Assets	Rs m	990,571	1,160,833	17.2%

Current Valuations for KARNATAKA BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 34.6, an improvement from the EPS of Rs 37.8 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 220.4, stands at 6.0 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.8 times, while the price to income ratio stands at 0.9 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	231.2	220.0
Earnings per share (Unadj.)	Rs	37.8	34.6
Diluted earnings per share	Rs	31.3	34.6
Avg P/E ratio	Rs	3.0	6.0
Avg P/ABV ratio	Rs	1.1	0.8
Avg Market Cap	Rs	35,014	77,987
Dividends per share (Unadj.)	Rs	5.00	5.50

Ratio Analysis for KARNATAKA BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 72.9x during FY24, from 68.6x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 9.45x during FY24, from 10.83x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): KARNATAKA BANK's capital adequacy ratio (CAR) was at 18.0% as on 31 March 2024 as compared to 17.5% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank deteriorated and stood at 12.0% during FY24, from 14.4% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank deteriorated and stood at 1.13% during FY24, from 1.19% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank deteriorated and stood at 14.25% during FY24, from 17.61% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. KARNATAKA BANK's gross NPA ratio stood at 3.5% as of 31 March 2024 compared to 3.7% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of KARNATAKA BANK was 1.6% in financial year 2024. This compared with 1.7% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	68.6	72.9
Debt to Equity Ratio	x	10.8	9.4
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	17.5	18.0
Return on Equity	%	14.4	12.0
Return on Assets	%	1.2	1.1
Return on Capital Employed	%	17.6	14.3
% of Gross NPAs	%	3.7	3.5
% of Net NPAs	%	1.7	1.6
Yield on Advances	x	9.3	9.1
Yield on Investments	x	6.2	6.2

To see how KARNATAKA BANK has performed over the last 5 years, please visit here.

KARNATAKA BANK Share Price Performance

Over the last one year, KARNATAKA BANK share price has moved down from Rs 229.0 to Rs 220.4, registering a loss of Rs 8.6 or around 3.8%.

Meanwhile, the S&P BSE BANKEX is trading at 57,555.2 (down 0.6%). Over the last one year it has moved up from 49,390.7 to 57,555.2, registering a gain of 8,164.6 points (up 16.5%).

Overall, the S&P BSE SENSEX is up 23.8% over the year.

(To know more, you can check out historical annual results for KARNATAKA BANK here and quarterly results for KARNATAKA BANK here)