Shares of Karnataka Bank were locked in the 20 per cent upper circuit at Rs 112.55 on the BSE on Wednesday after the bank posted a record quarterly net profit of Rs 411 crore for the quarter ended September 2022 (Q2FY22). The net profit grew by 228 per cent compared to the net profit of Rs 125 crore in Q2FY22.
The bank said the significant jump in net profit is mainly because of improved earnings, improved asset quality, healthy growth of advances, cost containment, and efficiency enhancement among others.
The stock hit an over three-year high, and was trading at its highest level since June 2019. A combined 20.04 million shares have changed hands, and there are pending buy orders for 2.6 million shares on the NSE and BSE.
For Q2FY23, the bank’s net interest income increased by 26 per cent year-on-year (YoY) to Rs 803 crore from Rs 637 crore in Q2FY22. The net interest margin improved to 3.56 per cent from 3.15 per cent in the year-ago quarter.
The bank’s asset quality improved further as gross non-performing assets (GNPAs) dropped 67 basis points (bps) on a sequential basis to 3.36 per cent at the end of September quarter. Net NPAs dropped 44 bps sequentially to 1.72 per cent. About a year back, the GNPA was at 4.52 per cent, and NNPA was at 2.85 per cent.
Outlook: Consolidation likely
Target: Rs 107
Support: Rs 103
While some sort of consolidation looks likely on the charts, as suggested by RSI and slow stochastic indicators, the stock may rally towards Rs 106.93, and then towards 110.5 levels if it stays above the said support levels, show the yearly Fibonnaci chart.
(With inputs from Nikita Vashisht)