Growth in net interest income and good control over the cost of deposits helped Karnataka Bank Ltd record a 7.09 per cent growth in net profit during the first quarter of 2011-12 .

Karnataka Bank registered a net profit of Rs 49.78 crore in the first quarter of 2011-12 against Rs 46.48 crore in the corresponding period of the previous fiscal.

Operating income

Speaking to Business Line here on Saturday, Mr P. Jayarama Bhat, Managing Director and Chief Executive Officer, attributed this growth to the increase in operating profit by 41.78 per cent and the net interest income going up by 36.29 per cent during the period. Added to this, the bank could keep the cost of deposits under control. .

During the first quarter, the net interest income of the bank stood at Rs 153.68 crore (Rs 112.76 crore), recording a growth of 36.29 per cent. And the operating profit stood at Rs 107.08 crore (Rs 75.52 crore).

On the cost of deposits, he said, in spite of the increase in deposit rates, the cost of deposits was controlled at 7.54 per cent (6.97 per cent). “Added to this, the yield on advances stood at 11.75 per cent (10.61 per cent). Thus, the spread increased from 3.64 per cent in Q1 of 2010-11 to 4.21 per cent in the first quarter of this fiscal,” he said.

The bank's other income during the period was Rs 82.10 core (75.36 crore). Of this, the trading profit stood at Rs 14.87 crore (Rs 16.92 crore), and fee-based income at Rs 67.18 crore (Rs 58.44 crore), he said.

The bank's net interest margin was at 1.93 per cent (1.64 per cent) during the period.

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