Karnataka Bank Q2 FY27: PAT up 36% YoY to ₹436 Cr, margins expand, asset quality improves

Karnataka Bank's consolidated net profit for Q2 FY27 (quarter ended September 30, 2026) rose 36.5% YoY to ₹435.86 Cr from ₹319.22 Cr, and 4.0% sequentially from ₹419.12 Cr, on interest income of ₹2,503.87 Cr (+14.9% YoY, +5.1% QoQ). Standalone PAT was near-identical at ₹435.89 Cr. No exceptional or extraordinary items were recorded in either the current quarter or the comparable periods, so the 36.5% YoY growth is a clean, unadjusted figure rather than one flattered by a prior-year low base.

Net profit margin widened to 15.60% of total income from 12.65% a year ago and 15.31% last quarter, while the operating-profit-to-interest-income ratio expanded YoY to 24.05% from 20.20%, though it eased slightly from 24.36% in Q1 FY27. The improvement was underpinned by asset quality: gross NPAs fell to 2.27% of advances from 3.33% a year earlier (2.58% last quarter) and net NPAs to 0.74% from 1.35% (0.87% last quarter), with provisions (other than tax) down to ₹14.74 Cr from ₹20.07 Cr YoY and the provision coverage ratio rising to 85.78% from 81.05%. Advances grew 25.5% YoY to ₹90,581 Cr and deposits 12.0% to ₹1,15,117 Cr, lifting the credit-deposit ratio to 78.7% from 75.2% at FY26-end.

The stock went into the print at ₹305.45, down 9% over the past month of trading.

For context: this is the highest quarterly PAT in the last 6 quarters on our records; PAT has now risen for 2 consecutive quarters; revenue is at a 6-quarter high.

CRAR 20.36% (Basel III) vs 21.10% in Q1 FY27 — net worth ₹13,357.60 Cr

Against management's own FY27 targets from the August 2026 concall — advances growth of 15-20%, deposits of 10-15%, cost-to-income of 52-53% and ROA of 1.35-1.40% — the Bank is running ahead on advances, on track on deposits, and inside the cost-to-income band at ~52.7% (on NII plus other income), but still short on ROA at 1.26% annualised, barely moved from 1.29% last quarter. Capital adequacy eased to 20.36% from 21.10% in Q1 but stays well above regulatory minimums. No management press release accompanied this filing, and no formal street/consensus estimates for the quarter could be located, so the print cannot be benchmarked against analyst expectations. The quarter also saw the launch of the 'Trade Konnect' digital trade-finance platform and the 'Nava Dhamaka 2026' retail campaign, alongside 13.8% YoY growth in the corporate banking segment and 16.0% in retail banking; separately, COO Raja B S resigned on October 19, 2026, days before results, though the filing gives no indication this is tied to the quarter's numbers.