Karnataka Bank Q4 Review - Asset Quality Improvement A Key To Re-Rating: Centrum Broking
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Centurm Broking Report
Karnataka Bank Ltd. saw a mixed Q4 FY21. Net interest income underperformed led by interest reversals resulting in net interest margin compression QoQ.
Loan growth saw a 9.3% decline YoY led by a sharp 53.4% contraction in corporate while retail/mid-corporate saw 6-7% growth.
The bank has significantly de-risked the portfolio with the retail/mid-corporate share improving from 74% in FY20 to 87% in FY21 which resulted in net interest income uptick of 16 basis points YoY to 2.9%.
Shift in loan mix has also led to freeing up of capital with common equity tier-1 enhancing from 10.7% in FY20 to 12.3% in FY21.
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