Karnataka Bank attributes marginal decline in net profits to RBI’s changed accounting policy

Karnataka Bank's financial results for FY 2024-25 show slight decline, but strong growth potential for FY 2025-26.

Karnataka Bank’s net profits for the year 2024-25 and the fourth quarter of FY 25 declined slightly to ₹1,272.37 crore from ₹1,306.28 crore and to ₹252.37 crore from ₹274.24 crore, respectively.

However, the corresponding previous year figures are not directly comparable due to changes in accounting policy for investments (as per master direction issued by RBI) since April 2024. Had the Bank continued to follow the earlier accounting policy, the net profit would have been ₹372 crore for Q4 FY25 (Y-o-Y growth of 35.6%) and ₹1,467 crore for the Full Year of FY25 (Y-o-Y growth of 12.3%), said a release from the Bank.

In its meeting here on Wednesday, the Board of Directors of the Bank approved the financial results for the quarter and full year ended March 31, 2025. The Bank has clocked an all-time high Aggregate Business at ₹1,82,766.21 crore. The Bank has made notable improvements in its three primary objectives of expanding the distribution network, improving the quality of asset book and working towards improving financial metrics.

Bank’s Aggregate Deposits stood at ₹1,04,807.49 crore, registering YoY growth of 6.96%, while Gross Advances stood at ₹77,958.72 crore, registering YoY growth of 6.79%. Retail advances grew by 15.44% while retail deposits improved to 93.4%. CASA Deposits grew by 6.35%, from ₹31,293 crore as in March 2024 to ₹33,281 crore as in March 2025.

Announcing the results here, Managing Director and CEO Srikrishnan Hari Hara Sarma said, “Karnataka Bank’s focus on developing retail, mid-market and direct-to-corporate lending businesses is picking up steam as reflected in the book growth during the last few quarters. The bank is well-positioned in the liability franchise, digital, and branch-led distribution. Based on sound financial parameters achieved during the year, substantial improvement in the book quality and improved technology platforms and processes, the outlook for FY’25-26 looks very promising.“

Executive Director Sekhar Rao said, “FY25 was a year marked by macroeconomic headwinds, tightening liquidity, and pressure on Net Interest Margins (NIMs). Despite these, we demonstrated resilience and adaptability, delivering a stable performance and reinforcing our strategic priorities.