Analyst Meet / AGM - Analyst Meet

16-May-2017, 01:10
Karnataka Bank conducted an analyst meet on 15 May 2017 to discuss the financial results for the quarter March 2017 and prospects of the Bank. Mahabaleshwara MS, MD & CEO of the bank addressed the meet:

Highlights:

• The bank has posted 11% growth in business level to touch Rs 93737 crore driven by 12% increase in deposits and 9% rise in advance end March 2017 over March 2016. The CASA deposits ratio increased to 29.04% end March 2017 from 26.26 % a year ago.
• As per the bank, the year was tough for credit expansion, but still maintained credit-deposit ratio stable at 65.2% end March 2017. The bank aims to improve credit-deposit to ratio to 70% in FY2018.
• On the loan book front, the bank is consistently focusing on strong growth of retail loan book. The share of retail loan book has moved up to 52.6%.
• The bank has been consistently achieving the priority sector loan (PSL) targets, helping reduce RIDF investment to Rs 1399 crore end March 2017. The priority sector advances of the Bank stood at 48.13% of total advances as against the minimum stipulated target of 40%.
• The bank has improved the share of digital transaction to 53.06% end March 2017 from 50.41% a year ago, while aims to further improve the share of digital transaction to 60% by end March 2018 and further higher to 80% by end March 2020.
• The fresh slippages of loans stood at Rs 511 crore, while the recoveries (Rs 269 crore) and write-offs (Rs 221 crore) together stood at Rs 490 crore in Q4FY2017.
• The slippages stood at Rs 1348 crore in FY2017, of which about 37 accounts with the exposure above Rs 5 crore contributed 1064 crore of slippages, 99 accounts in the range of Rs 1-5 crore contributed 208 crore of slippages, 102 accounts of Rs 0.5-1 crore contributed Rs 73 crore of slippages.
• The SMA-2 category loans of the bank have declined sharply to Rs 845 crore end March 2017 from Rs 1696 crore end March 2016.
• The gross restructured loans of the bank also declined to Rs 1365 crore end March 2017 from Rs 1807 crore end March 2016.
• The bank has exposure of Rs 400 crore to Strategic Debt Restructuring (SDR) scheme, Rs 23 crore to S4A scheme and nil to 5/25 refinancing scheme.
• The bank has conducted sale of assets worth Rs 131 crore to Asset Reconstruction Companies (ARCs) in Q4FY2017. The securities receipts on bank books stood at Rs 500 crore.
• About 93% of the loan book of the bank is secured, while 7% loan book is unsecured.
• The NPA divergence for the bank in line with RBI guidelines was at mere Rs 9.9 crore in FY2016.
• The bank has sizeable exposure to the microfinance sector, while it would be cautiously expanding in the segment.
• The staff strength of the bank stood at 8000 employees end March 2017.

Bank identity

• The bank has denied the rumors about bank being an acquisition target, while expressed commitment to maintain its identity and openness to acquire a good bank at appropriate time.

FY2018 goals

• The bank aims to raise the business to Rs 1.1 trillion by end March 2018 from Rs 0.94 trillion end March 2017. The bank has internally targeted higher business level of Rs 1.14 trillion with the growth target of 20% for FY2018.
• The bank is targeting loan growth of 20%, while deposit growth is expected at 14% to be mainly driven by CASA deposits. The CD ratio is targeted to be raised to 70% by March 2018.
• The bank proposes to reduce GNPA ratio to 4% and NNPA ratio to 2% by end March 2018.
• The bank is targeting PAT of Rs 600 crore for FY2018.
• The bank has the network of 765 branches end March 2017. The bank has slowed the pace of branches, while expects to add 35 new branches in FY2018. The bank would also focus on bank and ATM rationalization, based on performance in FY2018.
• The bank is planning to start centralized account opening cell in FY2018. The bank would also tie up with LIC for distribution of their insurance products.

FY2020 goals

• Under its Vision 2020, the bank aims to double the business level to Rs 1.8 trillion in next three years by FY2020 with the deposits at Rs 1 trillion and advances at Rs 0.8 trillion.
• The bank has put in place monthly target system. The bank proposes to expand its business by Rs 20000 crore in FY2018, Rs 30000 crore in FY2019 and Rs 40000 crore in FY2020 to touch a targeted business level of Rs 1.8 trillion by March 2020.
• The non-Karnataka state contributes about 48% of the business of the bank, while bank aims to improve the share of non-Karnataka state in business to 60% by FY2020.
• The bank aims to raise the size the distribution network to 1000 branches and 2500 ATMs totaling 3500 touch points by FY2020. The bank would also have 250 e-lobbies by end FY2020.
• The bank has the customer base of 82 lakh end March 2017, while it proposes to raise the customer base to 1.3 crore customers by March 2020.
• The bank has improved Provision Coverage Ratio (PCR) from 48% to 54% in FY2017, while aims to improve PCR to 70% by March 2020.
• The bank proposes to improve cost-to-income ratio to 40% FY2020, while expects FY2018 to be a turnaround year on cost-to-income ratio front.

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