Karnataka Bank has achieved a historic milestone by crossing the ₹2 lakh crore total business mark as of July 31, 2026, marking a significant achievement in its growth journey. In a stock exchange filing, the bank announced this milestone with gross aggregate business standing at ₹1,97,006.62 crore for the quarter ended June 30, 2026. The bank expressed gratitude to its Board of Directors, Chairman, valued customers, stakeholders and employees for their trust and unwavering commitment that made this achievement possible. Managing Director and CEO Raghavendra S Bhat highlighted that the bank has achieved this all-time high aggregate business of ₹1,97,006.62 crore and the net profit of ₹418.95 crore for the first quarter of 2026-27, reflecting the bank's unwavering commitment to sustainable growth, prudent financial management and customer-centric banking.
Karnataka Bank delivered impressive financial performance in the June 2026 quarter, with consolidated net profit surging 43.28% to ₹418.95 crore compared to ₹292.40 crore in the corresponding quarter of the previous year. According to reports from The Hindu BusinessLine and The Economic Times, this significant profit growth demonstrates the bank's strong operational performance during the quarter. Operating profit stood 24% higher year-on-year at ₹580 crore compared to ₹467 crore earlier, while gross advances stood at ₹86,610.21 crore, registering year-on-year growth of 16.62% from ₹74,267.02 crore in the previous year. Retail Banking continues to be the largest revenue driver for the bank. According to Anand Rathi's latest research report dated July 31, 2026, credit growth accelerated to 17% year-on-year in Q1FY27 from 6.9% year-on-year in Q4FY26, led by strong traction in RAM and mid-corporate segments, with management reiterating its 15-20% loan growth guidance for FY27.
The bank's aggregate deposits grew 6.93% to ₹1,10,396.41 crore during Q1FY27 compared to ₹1,03,242.17 crore in the corresponding period last year. According to The Hindu BusinessLine and The Economic Times, retail term deposits were at ₹69,410.29 crore, registering an increase of 6% from ₹65,786.24 crore. The CASA ratio improved to 32.42% from 30.84% in the previous year, indicating better low-cost deposit mobilization and customer relationship management. This improved CASA ratio supports the bank's cost of funds optimization strategy.
The bank's asset quality showed significant improvement with gross NPA improving by 88 basis points to 2.58% from 3.46% as of June 2025. As reported by The Hindu BusinessLine and The Economic Times, net NPA improved by 57 basis points to 0.87% from 1.44% compared to June 2025. Return on assets stood at 1.29% (0.97% previously). Gross NPAs declined to ₹2,233.25 crore from ₹2,571.09 crore year-on-year, while Provision Coverage Ratio improved to 84.70% from 81.11% previously. Return on Assets improved 2 basis points quarter-on-quarter to 1.29% in Q1FY27, with management aiming for 1.35-1.4% going ahead. Anand Rathi's research report notes that asset quality strengthened further with lower slippages and healthy recoveries, with the bank's RoA expected to sustain above 1% over FY27/28e. Bhat attributed this improvement to sound lending practices, effective recovery mechanisms, and sustained monitoring of the loan portfolio.
The bank's improved asset quality enabled significant reduction in provision requirements, with provision requirement reduced to ₹29 crore for the quarter against ₹111 crore in the year-ago period. According to The Economic Times, this substantial reduction in provisions contributed to the strong profit growth. The bank's Capital to Risk Asset Ratio (CRAR) improved from 20.46% as on June 30, 2025, to 21.10% as on June 30, 2026, reflecting its strong capital position and continued commitment to financial resilience. Biji SS, Executive Director emphasized that the bank continues to strengthen its business fundamentals through prudent risk management, enhanced operational resilience, and a steadfast focus on governance and compliance. During the quarter, the bank transferred the entire balance of ₹127.00 crore from the Investment Fluctuation Reserve to Revenue Reserve following an RBI circular dated May 18, 2026. The bank also acquired loans worth ₹175 crore through direct assignment with a weighted average residual maturity of 12 years 6 months and an external rating of A+ from India Ratings. Anand Rathi maintains a BUY rating on the stock with a 12-month target price of ₹364, valuing it at 0.9x FY28e P/BV, citing stable margin, healthy balance sheet growth, controlled slippages and manageable ECL transition as key factors supporting the positive outlook.
