Karnataka Bank - Margins stable; NPL's moderate - Edelweiss

Karnataka Bank's (KBL) PAT moderated to INR801mn (up only 11% YoY) in Q3FY13, largely due to increased tax expense, higher provisioning for standard restructured accounts (INR90mn, as RBI raised requirement) and proactive provisioning for second wage revision (INR90mn).

Headline asset quality numbers of GNPA/NNPA came in at 3.30%/2.19% (vis-à-vis 3.22%/2.08% in Q2FY13). Margin dipped a tad to 2.36% on 25bps base rate cut in Q3FY13. We expect the bank's NIMs to rise going forward due to improving CD ratio and reducing shortfall on PSL book and RoA to remain around 0.9%.

Maintain 'BUY' with target price of INR180.

Source : Equity Bulls

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