KARNATAKA BANK 2022-23 Annual Report Analysis

Tue, 15 Aug

KARNATAKA BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

KARNATAKA BANK Income Statement Analysis

• Interest income during the year rose 16.0% on a year-on-year (YoY) basis.
• Interest expenses were up by 8.2% YoY during the same period.
• Operating expenses increased by 8.7% YoY during the year.
• The bank's net interest income (NII) increased by 27.9% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.8% in FY23 as against 3.2% in FY22.
• Other income increased by 4.1% YoY during the year.
• Net profit for the year increased by 132.2% YoY.
• Net profit margins during the year increased to 16.3% in FY23 from 8.2% in FY22.

KARNATAKA BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	62,217	72,202	16.0%
Other Income	Rs m	9,539	9,926	4.1%
Interest Expense	Rs m	37,306	40,351	8.2%
Net Interest Income	Rs m	24,910	31,851	27.9%
Operating Expense	Rs m	18,116	19,700	8.7%
Pre-provision Operating Profit	Rs m	16,334	22,077	35.2%
Provisions & Contingencies	Rs m	11,254	10,280	-8.7%
Profit before tax	Rs m	6,939	14,405	107.6%
Tax	Rs m	1,859	2,608	40.3%
Profit after tax	Rs m	5,080	11,797	132.2%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.2	3.8
Net profit margin	%	8.2	16.3

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KARNATAKA BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 873.7 bn as compared to Rs 803.9 bn in FY22, thereby witnessing an increase of 8.7%.
• Advances for the year stood at Rs 599.5 bn as compared to Rs 567.8 bn during FY22, a rise of 5.6%.
• Cost of deposits for KARNATAKA BANK fell 2.8% and stood at 4.3%, while yield on advances rose to 9.3%.
• The lender's investments rose to Rs 233.2 bn during the year from Rs 220.4 bn in FY22.
• Borrowing stood at Rs 15.6 bn, a fall of 32.5% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 990.6 bn as against Rs 915.8 bn during FY22, thereby witnessing a rise of 8.2%.

KARNATAKA BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	70,939	82,120	15.8%
Advances	Rs m	567,831	599,516	5.6%
Deposits	Rs m	803,867	873,679	8.7%
Yield on advances	%	8.3	9.3
Cost of Deposits	%	4.5	4.3
Investments	Rs m	220,400	233,249	5.8%
Borrowings	Rs m	23,138	15,627	-32.5%
Total Assets	Rs m	915,833	990,571	8.2%

Current Valuations for KARNATAKA BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 37.8, an improvement from the EPS of Rs 16.3 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 225.6, stands at 3.0 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.9 times, while the price to income ratio stands at 0.5 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	200.0	231.2
Earnings per share (Unadj.)	Rs	16.3	37.8
Diluted earnings per share	Rs	16.3	37.8
Avg P/E ratio	Rs	4.1	3.0
Avg P/ABV ratio	Rs	0.3	0.9
Avg Market Cap	Rs	20,747	35,014
Dividends per share (Unadj.)	Rs	4.00	5.00

Ratio Analysis for KARNATAKA BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio deteriorated and stood at 68.6x during FY23, from 70.6x during FY22. 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 10.83x during FY23, from 11.66x during FY22. 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 17.5% as on 31 March 2023 as compared to 15.7% 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 improved and stood at 14.4% during FY23, from 7.2% during FY22. 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 improved and stood at 1.19% during FY23, from 0.55% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 17.61% during FY23, from 9.43% during FY22. 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 3.7% as of 31 March 2023 compared to 3.9% 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 1.7% in financial year 2023. This compared with 2.4% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	70.6	68.6
Debt to Equity Ratio	x	11.7	10.8
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	15.7	17.5
Return on Equity	%	7.2	14.4
Return on Assets	%	0.6	1.2
Return on Capital Employed	%	9.4	17.6
% of Gross NPAs	%	3.9	3.7
% of Net NPAs	%	2.4	1.7
Yield on Advances	x	8.3	9.3
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 up from Rs 78.6 to Rs 225.6, registering a gain of Rs 147.0 or around 187.1%.

Meanwhile, the S&P BSE BANKEX is trading at 49,462.3 (down 0.3%). Over the last one year it has moved up from 44,758.1 to 49,462.3, registering a gain of 4,704.2 points (up 10.5%).

Overall, the S&P BSE SENSEX is up 10.2% over the year.

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