Karnataka Bank reports 5% decline in Q2 net profit

Karnataka Bank Ltd reported a net profit of ₹319.12 crore for the second quarter of 2025-26, reflecting a 5.04% decline compared to ₹336.07 crore earned in the same period of 2024-25. However, the bank showed sequential improvement with a 9.1% profit growth from ₹292.40 crore recorded in the first quarter of 2025-26.

The bank’s board of directors approved these financial results during a Saturday meeting in Mangaluru. For the half-year ending September 2025, net profit stood at ₹611.52 crore compared to ₹736.40 crore during the corresponding period last year.

Second quarter performance showed net interest income (NII) at ₹728.12 crore (down from ₹833.56 crore in Q2 2024-25) while other income rose to ₹343.37 crore (₹269.92 crore). The bank’s net interest margin contracted to 2.72% from 3.23% year-on-year.

Asset quality displayed mixed trends with gross NPAs rising to 3.33% (from 3.21%) while net NPAs improved to 1.35% (from 1.46%) compared to the same quarter last fiscal year.

Managing Director Raghavendra S Bhat noted: “While experiencing marginal quarter-on-quarter decline in topline performance, we’ve strengthened asset quality. Our strategic focus remains on expanding retail, agriculture and MSME segments while enhancing low-cost deposit mobilization to improve net interest income.

The CEO emphasized ongoing initiatives to build a high-quality credit portfolio through stricter slippage control and NPA recovery measures. The bank’s Analytical Centre of Excellence has implemented data-driven tools including Retail Loan Propensity, Micro Market Analysis, and Collection Prioritization systems that are now integrated into core decision-making processes.

Total business stood at ₹1,76,461.34 crore in Q2 2025-26 compared to ₹1,75,196.93 crore in the year-ago period. Deposit base grew to ₹1,02,817.19 crore (₹99,880.84 crore) while gross advances decreased to ₹73,644.15 crore (₹75,316.09 crore), resulting in a 71.63% credit-deposit ratio.

Capital adequacy strengthened significantly to 20.84% from 17.58% year-on-year. The bank reported a Liquidity Coverage Ratio of 188.16% as of September 30, 2025, computed under revised RBI guidelines.

Published on November 8, 2025