Karnataka Bank shares today locked in 20% upper circuit after posting record profits | Mint – Mint

  • Karnataka Bank shares are up over 80% so far this year

Shares of Karnataka Bank today jumped as much as 20%, marking their biggest percentage gain in over 13 years, after the private lender reported a more-than-three-fold jump in quarterly profit. Net profit soared to 412 crore, its all-time high, in the quarter ended September 30, from 126 crore a year earlier. The lender had reported earnings after markets closed on Tuesday. Year to date, its shares are up over 80%.
At10:35 am, Karnataka Bank shares were locked in 20% upper circuit and traded at 112.55. For the quarter ending September 2022, the private lender’s net interest income also increased by 26% to 802.73 crore from 637.10 crore.
The net interest margin grew by 47 bps in Q2FY23 to 3.78%.
“The stock has come out of long consolidation as well as an inverse head and shoulder pattern breakout in the longer timeframe with strong volume. The current structure of the counter looks fertile as it has traded above all important moving averages. On the higher side, Rs. 125–130 is the susceptible level; above this Rs. 150 is the target for the near term, while on the lower side, Rs. 90 is the critical support,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart. 
The NPAs also moderated. as the gross non-performing asset(GNPA) went down to 3.36% against 4.03% in the June quarter while NNPAs or gross non-performing assets also reduced to 1.72 % against 2.16% as of 30th June, 2022.
A year ago, the GNPA and NNPA levels were at 4.52%, and NNPA was at 2.85% respectively.
CEO Mahabaleshwara MS attributed the significant jump in net profit to improved earnings, improved asset quality, healthy growth of advances, cost containment, and efficiency enhancement, among others.
“The second quarter is a turning point for Karnataka Bank as our net interest income and margin expanded meaningfully and remain poised for future growth. Our all-time high Q2FY23 result represents the tipping point of the Bank’s reinvigorated trajectory,” he added. The lender is undergoing a transformation to becoming a highly digitally focused bank that has future-ready operations and can outpace market demands.
Incorporated in 1924, Karnataka Bank Limited has over 8,000 employees and over 800 branches. Major Indian banks have reported strong profit growth in the September quarter as lending improved despite a slew of rate hikes by the central bank to tame high inflation.
Commenting on the current earnings season, Axis Securities said: “Overall Q2FY23 earnings have been in line with our expectations so far. While the expectation on the revenue front was largely met, earnings miss was seen in export and commodity themes. The Banking sector held the performance and accounted for most of the incremental growth in the corporate earnings while cyclical sectors including Metals, Cement, and Oil & Gas were the biggest laggards due to lower realization and higher Raw Material costs during the quarter.”
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