Private sector lender Karnataka Bank reported a fall in its net profit by 46% to Rs 1,060.8 million in the first quarter ended June 2021 (Q1FY22), mainly on account of decreased treasury income.

The bank had posted a net profit of Rs 1,963.8 million during the same quarter last year (Q1FY21). Sequentially, the bank had booked a profit of Rs 313.6 million in the quarter ended March 2021 (Q4FY21).

Commenting on the Q1 results of the Bank, Mahabaleshwara M. S., Managing Director & CEO of the Bank, said, "The reduction in net profit on year on year basis is mainly on account of decline in treasury gains, which is dependent on the yield movements. Compared to the sequential previous quarter (Q4 of FY21) the advances have shown marginal increase and is expected to consolidate further during the second quarter of the current year. Hence, the core business is expected to do well going forward, besides further improving the asset quality. Further, we have also deliberated about capital augmentation through QIP and the process would be taken forward after the due approval of the shareholders."

The bank's total Capital Adequacy Ratio (CRAR) stood at 14.58% in June 2021. Further, the bank board approved raising capital through Qualified Institutional Placements (QIP). It expects to issue 150 million equity shares. It is seeking shareholders nod for proposed equity offering.

The bank’s net interest income (NII) rose by 7.41% in Q1FY22 to Rs 5,747.9 million from Rs 5,351.2 million in Q1FY21. Sequentially NII rose by 25.19% to Rs 4,591.4 million in Q4FY21. Net interest margin (NIM) for the quarter rose to 2.98% for Q1FY22 from 2.89% for Q1FY21. NIM was 2.41% in Q4FY21.

The bank's gross non-performing assets (NPAs) rose to 4.82% in June 2021 from 4.64% a year-ago. Sequentially, GNPAs fell from 4.91% in March 2021. Its provisions fell to Rs 3,680.8 million in Q1FY22 from Rs 5,090.7 million in Q1FY21. The provisions rose marginally at Rs 3,418.3 million in Q4FY21.

Advances fell by 4.46% to Rs 517,910 million in Q1FY22, while deposits also grew by 6.07% to Rs 762,147.8 million in June 2021.

Shares of the bank declined Rs 1.55, or 2.62%, to settle  at  Rs 57.50.  The total volume of shares traded  was  487,830 at  the BSE (Wednesday).