The Karnataka Bank LimitedQ2 FY27 Results & Financial Update
The Karnataka Bank Limited: Q2 FY27 consolidated results and company financials – revenue ₹2,793.96 Cr, PAT ₹854.84 Cr. Explore reported YoY/QoQ movements, margins, business drivers and management commentary. This page does not provide a rating, target price or investment recommendation.
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Quarterly Results AnalysisExplore The Karnataka Bank Q2 FY27 quarterly results and earnings: revenue, profit (PAT), EBITDA, margins, YoY and QoQ growth, order book or business updates where reported, financial performance and management commentary. Reported figures and Nivata calculations are shown separately; no buy, sell or hold recommendation is provided.
Quarter overview
Quarterly earnings analysis
On the operating front, gross advances expanded notably to reach Rs. 92,015 crore as of Q2 FY27, representing a 6% sequential growth compared to Rs. 86,610 crore in Q1 FY27. Retail advances reached Rs. 46,000 crore, growing 5% quarter-on-quarter, while retail, agriculture, and MSME combined advances grew 7% sequentially.
Total deposits aggregated to Rs. 1,15,117 crore at the end of Q2 FY27, marking a 4% quarter-on-quarter increase from Rs. 110,396 crore. Retail term deposits rose by 4% sequentially to Rs. 72,197 crore, while CASA deposits stood at Rs. 36,605 crore, reflecting a CASA ratio of 31.80%.
Asset quality metrics recorded visible improvements during the quarter. Gross Non-Performing Assets (GNPA) ratio improved by 31 basis points sequentially to 2.27% in Q2 FY27 from 2.58% in Q1 FY27, while the Net Non-Performing Assets (NNPA) ratio improved by 13 basis points to 0.74%.
Provision coverage ratio (PCR excluding technical write-offs) strengthened to 68.05% in Q2 FY27 compared to 67.03% in the preceding quarter, reflecting increased provisioning buffers against stressed assets. Total provisions for the quarter were reported at Rs. 14.74 crore.
Capital adequacy remained robust, with the Capital to Risk-Weighted Assets Ratio (CRAR) standing at 20.36% as of September 30, 2026, well above regulatory thresholds. The credit-deposit (CD) ratio was reported at 79.93%, aligning with the bank's targeted structural balance between liquidity and credit deployment.
01 · Business model
What does The Karnataka Bank do?
The Karnataka Bank Limited is a private sector scheduled commercial bank operating across India with more than a century of banking heritage. Established in 1924 and headquartered in Mangaluru, Karnataka, the bank provides a comprehensive suite of financial products spanning retail banking, agricultural credit, MSME financing, corporate lending, treasury operations, and digital banking channels.
The bank's revenue generation relies primarily on interest earned from its loan portfolio, investments, and advances, supplemented by non-interest income comprising fee-based services, commissions from insurance and mutual fund distribution, and treasury gains. Its branch and ATM network spans multiple states, with a heavy concentration in southern India, anchored by its core home state presence.
The operating model emphasizes building a granular deposit franchise, growing retail and MSME loan books, maintaining asset quality through proactive recovery mechanisms, and enhancing digital touchpoints to capture cross-selling and up-selling opportunities across its customer base.
The bank operates through a diversified distribution setup encompassing dedicated retail and MSME processing centers, agricultural development branches, and digital platforms to serve both individual borrowers and corporate entities.
02 · Historical context
What shaped the business before this quarter
Having completed 100 years of banking operations, the bank transitioned its operational focus toward expanding its retail, agriculture, and MSME portfolios while modernizing its digital infrastructure.
The bank systematically increased the share of retail advances within its total loan mix from 46% in FY20 to 50% by Q2 FY27, balancing its corporate exposures.
03 · Financial snapshot
Current-quarter financial snapshot
| Metric | Q2 FY27 |
|---|---|
| Total income | ₹2,793.96 Cr |
| Interest income | ₹2,503.87 Cr |
| Other income | ₹290.09 Cr |
| Pre-provision operating profit | ₹602.20 Cr |
| Provisions | ₹14.74 Cr |
| Profit before tax | ₹587.46 Cr |
| Profit after tax | ₹854.84 Cr |
| EPS | ₹11.52 |
| Gross NPA ratio | 2.27% |
| Net NPA ratio | 0.74% |
| Return on assets | 1.26% |
04 · Earnings & margin drivers
What drove earnings and margins
What drove net interest income and earnings
Generated Rs. 2,503.87 crore in interest income during Q2 FY27 from advances, investments, and other interest-bearing assets.
Contributed Rs. 290.09 crore in other income during Q2 FY27, encompassing fee-based services, insurance and mutual fund commissions, and recoveries from written-off accounts.
Gross advances grew 6% sequentially to Rs. 92,015 crore, fueled by disbursements across retail, agricultural, and MSME lending segments.
NIM, spread, funding cost and credit cost
Reported a Net Interest Margin (NIM) of 3.17% for Q2 FY27, moving 3 basis points lower quarter-on-quarter.
Cost of deposits stood at 5.13% and cost of funds at 5.15% for Q2 FY27, reflecting stable liability management amidst competitive deposit pricing.
Yield on advances was recorded at 8.76% for Q2 FY27, compared to 8.68% in the preceding quarter.
05 · Loan growth, sanctions & disbursements
How the lending book is moving
Served approximately 14 million customers across retail, corporate, and institutional categories.
Total deposits expanded to Rs. 1,15,117 crore, supported by Rs. 72,197 crore in retail term deposits and Rs. 36,605 crore in CASA deposits.
Retail loan disbursements totaled Rs. 7,646 crore in Q2 FY27, including Rs. 3,065 crore in gold loans, Rs. 1,618 crore in retail-focused loans (housing, car, education), and Rs. 1,493 crore in retail-MSME loans.
06 · Portfolio mix & lending exposure
Where the loan book is concentrated
Segments and products
Retail advances reached Rs. 46,000 crore in Q2 FY27, recording a 5% quarter-on-quarter growth.
Combined advances for retail, agriculture, and MSME grew 7% sequentially to Rs. 35,047 crore (classified under internal parameters), while total RAM sectors continued to form the core of the asset portfolio.
MSME gross NPA ratio stood at 5.55%, agriculture at 2.50%, housing at 1.84%, infrastructure at 0.32%, and large enterprises at 1.67% as of September 30, 2026.
Geography and market mix
Operated a nationwide network of 976 branches across 22 states and union territories, with 46.62% of branches located in rural and semi-urban areas.
Karnataka remained the largest geographic concentration with 626 branches, followed by Maharashtra (59), Tamil Nadu (55), Andhra Pradesh (45), and Telangana (30).
07 · Asset quality & capital strength
How credit quality and balance-sheet capacity changed
Asset quality, stages and credit risk
GNPA stood at Rs. 2,091.33 crore (2.27% of gross advances) and Net NPA stood at 0.74% as of September 30, 2026.
Provision coverage ratio (excluding technical write-offs) improved to 68.05% as of Q2 FY27, up 102 basis points sequentially.
Standard restructured portfolio declined to Rs. 649 crore in Q2 FY27 from Rs. 763 crore in Q1 FY27, reflecting a 15% sequential reduction.
Slippage ratio remained low at 0.11% for Q2 FY27 compared to 0.14% in Q1 FY27.
Capital adequacy, net worth and balance-sheet capacity
Maintained a robust CRAR of 20.36% as of September 30, 2026, comprising Tier 1 capital at 19.20% and Tier 2 capital at 1.16%.
08 · Strategy & portfolio evolution
How the lending mix and strategic agenda are changing
Advanced digital transformation pillars including digitization of gold loans, CKYC-based onboarding pilots, interest-bearing credit lines on UPI, and AI-powered sales and collection assistants.
Leveraged agency bank status for direct tax, GST, and customs collections, alongside tie-ups with entities like PFC, REC, IRFC, and HUDCO for issuing Capital Gain Bonds.
09 · Reported developments
What changed operationally
Significant sequential reduction in GNPA ratio to 2.27% and standard restructured portfolio down to Rs. 649 crore.
Gross advances expanded by 6% quarter-on-quarter to reach Rs. 92,015 crore.
10 · Items worth noticing
The line items that can distort a quick read
Total provisions for Q2 FY27 were reported at Rs. 14.74 crore, including Rs. 2.16 crore for non-performing advances and Rs. 11.74 crore for standard advances.
11 · Funding & balance sheet
How funding, liquidity and capital support the loan book
Capital allocation & funding
Total borrowings stood at Rs. 5,463.77 crore as of September 30, 2026, compared to Rs. 4,404.63 crore as of June 30, 2026.
Liquidity Coverage Ratio (LCR) was maintained at 164.0% at the end of Q2 FY27.
12 · Management guidance & targets
What management is targeting from here
Management guided toward a CD ratio target of 79.0% - 80.0%, CASA ratio of approximately 34.0%, NIM of 3.0% - 3.4%, NNPA of 0.6% - 0.8%, cost-to-income ratio of 52.0% - 55.0%, and ROA of 1.1% - 1.35%.
13 · Beyond the numbers
What changed beyond the numbers
Reported update
Digital Banking Recognition
Won the Digital Onboarding Excellence Award at the Global Fintech Fest 2026 and an award in the Digital Banking Leadership category at the BFSI Game Changer Awards.
14 · Previous-quarter changes
What changed since the previous quarter
Gross advances increased from Rs. 86,610 crore in Q1 FY27 to Rs. 92,015 crore in Q2 FY27.
15 · Key Q&A
The quarter, answered directly
What does The Karnataka Bank do?
The Karnataka Bank Limited is a private sector scheduled commercial bank operating across India with more than a century of banking heritage. Established in 1924 and headquartered in Mangaluru, Karnataka, the bank provides a comprehensive suite of financial products spanning retail banking, agricultural credit, MSME financing, corporate lending, treasury operations, and digital banking channels.
What is the clearest takeaway from Q2 FY27?
On the operating front, gross advances expanded notably to reach Rs. 92,015 crore as of Q2 FY27, representing a 6% sequential growth compared to Rs. 86,610 crore in Q1 FY27. Retail advances reached Rs. 46,000 crore, growing 5% quarter-on-quarter, while retail, agriculture, and MSME combined advances grew 7% sequentially.
What drove earnings or loan-book movement?
Generated Rs. 2,503.87 crore in interest income during Q2 FY27 from advances, investments, and other interest-bearing assets.
What mattered most for margins, funding or credit cost?
Reported a Net Interest Margin (NIM) of 3.17% for Q2 FY27, moving 3 basis points lower quarter-on-quarter.
What changed operationally beyond the headline numbers?
GNPA stood at Rs. 2,091.33 crore (2.27% of gross advances) and Net NPA stood at 0.74% as of September 30, 2026.
What is management guiding or targeting from here?
Management guided toward a CD ratio target of 79.0% - 80.0%, CASA ratio of approximately 34.0%, NIM of 3.0% - 3.4%, NNPA of 0.6% - 0.8%, cost-to-income ratio of 52.0% - 55.0%, and ROA of 1.1% - 1.35%.
16 · Scenario calculator
Earnings sensitivity: what if growth and margins change?
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17 · Next filing checkpoints
What the next disclosure can confirm or change
- 01
Asset Quality Trajectory: Monitor further movement in GNPA and NNPA ratios alongside standard restructured portfolio reductions.
- 02
Margin and Cost Efficiency: Track Net Interest Margin performance relative to the 3.0% - 3.4% target band and cost-to-income progression.
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Need the concepts first?
Use Nivata’s plain-English guides to understand the accounting terms used in this brief before interpreting them.