Financial Performance Overview

Karnataka Bank reported its financial results for the quarter ended June 30, 2026 (Q1 FY27), achieving record performance across multiple metrics.

Profitability Metrics:

  • Net Profit: ₹418.95 crores for Q1 FY27, representing a 43.28% YoY increase from ₹292.40 crores in Q1 FY26
  • Operating Profit: ₹580.34 crores, up 24.19% YoY from ₹467.29 crores
  • Return on Assets (ROA): Improved to 1.29% from 0.97% in Q1 FY26, a 32 bps increase
  • Net Interest Income: ₹938.29 crores, showing 24.18% YoY growth from ₹755.60 crores
  • Net Interest Margin (NIM): 3.20%, expanding by 38 bps from 2.82% in Q1 FY26
  • Cost to Income Ratio: 55.14%, improved by 291 bps from 58.05% in Q1 FY26

Business Growth:

  • Aggregate Business (Gross): ₹1,97,006.62 crores, an all-time high representing 10.98% YoY growth from ₹1,77,509.19 crores
  • Gross Advances: ₹86,610.21 crores, showing 16.62% YoY growth from ₹74,267.02 crores
  • Total Deposits: ₹1,10,396.41 crores, with 6.93% YoY growth from ₹1,03,242.17 crores
  • Retail Term Deposits: ₹69,410.29 crores, up 6% YoY from ₹65,786.24 crores
  • CASA: ₹35,787.30 crores, growing 12.41% YoY from ₹31,835.26 crores
  • CASA Ratio: 32.42%, improved by 158 bps from 30.84% in Q1 FY26

Asset Quality Improvement:

  • Gross NPA:
  • Amount: ₹2,233.25 crores, decreased by 13.14% YoY from ₹2,571.09 crores
  • Ratio: 2.58%, improved by 88 bps from 3.46% in June 2025
  • Net NPA:
  • Amount: ₹736.38 crores, decreased by 29.84% YoY from ₹1,049.53 crores
  • Ratio: 0.87%, improved by 57 bps from 1.44% in June 2025
  • Provision Coverage Ratio (including TWO): 84.70%, improved by 359 bps from 81.11%
  • Provision Coverage Ratio (excluding TWO): 67.03%, improved by 785 bps from 59.18%
  • Capital Adequacy Ratio (CRAR): 21.10% as on June 30, 2026, improved from 20.46% as on June 30, 2025

Management Commentary

Shri Raghavendra S. Bhat, Managing Director & CEO emphasized the bank's commitment to sustainable growth, prudent financial management, and customer-centric banking. He attributed the performance to sound lending practices, effective recovery mechanisms, and sustained portfolio monitoring. The digital transformation journey continues to strengthen technology capabilities for innovative and secure banking solutions.

Smt. Biji S. S., Executive Director highlighted disciplined execution, strong operational framework, and employee commitment. The bank is leveraging technology to simplify processes, enhance customer convenience, and improve service delivery across all channels while maintaining focus on prudent risk management and operational resilience.

Performance Highlights Table Comparison

| Parameters | Q1 FY27 | Q1 FY26 | YoY Variation | Q4 FY26 | QoQ Variation | FY26 Annual |

| Aggregate Business (Gross) | 1,97,006.62 | 1,77,509.19 | 10.98% | 1,92,118.67 | 2.54% | 1,92,118.67 |

| Gross Advances | 86,610.21 | 74,267.02 | 16.62% | 83,339.92 | 3.92% | 83,339.92 |

| Total Deposits | 1,10,396.41 | 1,03,242.17 | 6.93% | 1,08,778.75 | 1.49% | 1,08,778.75 |

| CASA | 35,787.30 | 31,835.26 | 12.41% | 36,559.66 | -2.11% | 36,559.66 |

| CASA Ratio (%) | 32.42 | 30.84 | 158 bps | 33.61 | -119 bps | 33.61 |

| Operating Profit | 580.34 | 467.29 | 24.19% | 615.04 | -5.64% | 1,974.17 |

| Net Profit | 418.95 | 292.40 | 43.28% | 408.19 | 2.64% | 1,310.50 |

| Net Interest Income | 938.29 | 755.60 | 24.18% | 842.95 | 11.31% | 3,118.73 |

| Net Interest Margin(%) | 3.20 | 2.82 | 38 bps | 3.07 | 13 bps | 2.88 |

| Return on Assets (%) | 1.29 | 0.97 | 32 bps | 1.27 | 2 bps | 1.05 |

| Cost to Income Ratio (%) | 55.14 | 58.05 | -291 bps | 50.47 | 467 bps | 56.34 |

| Gross NPA Amount | 2,233.25 | 2,571.09 | -13.14% | 2,320.93 | -3.78% | 2,320.93 |

| Gross NPA % | 2.58 | 3.46 | -88 bps | 2.78 | -20 bps | 2.78 |

| Net NPA Amount | 736.38 | 1,049.53 | -29.84% | 803.22 | -8.32% | 803.22 |

| Net NPA % | 0.87 | 1.44 | -57 bps | 0.98 | -11 bps | 0.98 |

| PCR (Including TWO) | 84.70 | 81.11 | 359 bps | 83.54 | 116 bps | 83.54 |

| PCR (Excluding TWO) | 67.03 | 59.18 | 785 bps | 65.39 | 164 bps | 65.39 |

Key Performance Drivers

  • Strong business growth across both advances (17% YoY) and deposits (7% YoY)
  • Significant margin expansion with NIM improving 38 bps YoY to 3.20%
  • Improved asset quality with substantial reduction in both gross and net NPAs
  • Enhanced provision coverage providing stronger buffer against potential losses
  • Operational efficiency reflected in improved cost to income ratio
  • Digital transformation contributing to customer experience and operational effectiveness