Karnataka Bank Posts Record Q1FY27 Net Profit of ₹418.95 Crore, Up 43% YoY
Karnataka Bank posted a record Q1FY27 net profit of ₹418.95 crore, up 43% YoY, driven by lower provisions and a 24.2% rise in NII to ₹938.29 crore. Asset quality improved with GNPA at 2.58% and NNPA at 0.87% on both YoY and QoQ bases. Aggregate business reached ₹1,97,006.62 crore, with CRAR at 21.10% and ROA improving to 1.29%.
*this image is generated using AI for illustrative purposes only.
Karnataka Bank delivered its strongest quarterly performance to date in Q1FY27, reporting a net profit after tax (PAT) of ₹418.95 crore, a 43% year-on-year increase from ₹292.40 crore in Q1FY26. The lender's aggregate business crossed the ₹2 lakh crore mark, reaching ₹1,97,006.62 crore as of June 30, 2026, signaling robust growth momentum. This financial strength is underpinned by a significant expansion in Net Interest Margin (NIM) to 3.20%, up 38 basis points (bps) YoY, and a sharp improvement in asset quality that reduced provisioning burdens.
The Board of Directors approved the unaudited standalone and consolidated results on July 29, 2026, following a review by the Audit Committee on July 28, 2026. The results were subjected to a limited review by Joint Statutory Auditors Ravi Rajan & Co. LLP and R.G.N. Price & Co., who issued an unmodified opinion. The disclosure was made pursuant to Regulations 30, 33, 51, and 52 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Financial Performance
The bank's profitability surge was primarily driven by lower credit costs rather than top-line expansion. Provisions for non-performing advances dropped significantly to ₹25.64 crore from ₹117.59 crore in the corresponding period last year. Total provisions fell to ₹28.70 crore from ₹110.80 crore YoY. Operating profit before provisions rose 24.2% to ₹580.34 crore. Interest income increased 5.4% to ₹2,382.65 crore, while interest expense declined 4.1% to ₹1,444.36 crore, boosting Net Interest Income (NII) by 24.2% to ₹938.29 crore.
| Metric | Q1FY27 (₹ Cr) | Q1FY26 (₹ Cr) | YoY Change |
|---|---|---|---|
| Total Income | 2,738.07 | 2,619.64 | +4.5% |
| Net Interest Income | 938.29 | 755.60 | +24.2% |
| Operating Profit (pre-prov.) | 580.34 | 467.29 | +24.2% |
| Net Profit After Tax | 418.95 | 292.40 | +43.3% |
Asset quality metrics showed consistent improvement across both annual and sequential periods. Gross Non-Performing Assets (GNPA) ratio declined to 2.58% from 3.46% YoY and 2.78% sequentially. Net NPA (NNPA) ratio fell to 0.87% from 1.44% YoY and 0.98% sequentially. The Provision Coverage Ratio (excluding Two-Opposite-View accounts) improved to 67.03%. The Capital Adequacy Ratio (CRAR) under Basel III norms stood at 21.10%, up from 20.46% in June 2025.
| Asset Quality Metric | Q1FY27 | Q4FY26 (QoQ) | Q1FY26 (YoY) |
|---|---|---|---|
| GNPA Ratio | 2.58% | 2.78% | 3.46% |
| NNPA Ratio | 0.87% | 0.98% | 1.44% |
| Provision Coverage Ratio | 67.03% | — | — |
| CRAR (Basel III) | 21.10% | — | 20.46% |
What the Numbers Show
The divergence between modest revenue growth (4.5%) and strong profit growth (43%) highlights the normalization of credit costs as the primary earnings driver. The decline in interest expense despite higher interest income reflects successful liability management, contributing to the NIM expansion. Additionally, the standard restructured portfolio decreased by 5% quarter-on-quarter to ₹763 crore, indicating progress in resolving stressed assets. Return on Assets (ROA) improved to 1.29% from 0.97%, demonstrating enhanced capital efficiency.
Segmental and Operational Insights
Retail Banking remained the largest revenue contributor at ₹1,265.74 crore, with segment results improving to ₹309.58 crore from ₹262.51 crore YoY. Corporate Banking contributed ₹909.61 crore. Gross Advances grew 17% YoY to ₹86,610.21 crore, while Aggregate Deposits rose 7% to ₹1,10,396.41 crore. The CASA ratio improved by 158 bps to 32.42%, driven by a 12.4% YoY growth in low-cost deposits to ₹35,787.30 crore.
Managing Director & CEO Raghavendra S. Bhat emphasized sustainable growth and digital transformation, while Executive Director Biji S. S. highlighted disciplined execution. The bank also received awards for Cyber Resilience and Product Innovation at the IBA CISO Summit and Great Indian BFSI Awards 2026.
Historical Stock Returns for Karnataka Bank
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +1.39% | +1.80% | +13.77% | +49.46% | +81.86% | +430.74% |
Can the current NIM expansion of 38 bps be sustained in Q2FY27 given the potential for competitive pressure on deposit rates?
How might the continued decline in GNPA to 2.58% impact future provisioning requirements and overall capital adequacy ratios?
What specific strategies is Karnataka Bank employing to accelerate retail banking revenue growth beyond the current ₹1,265 crore contribution?
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