The Karnataka Bank Limited (KTKBANK) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Karnataka Bank Ltd. Q1 FY27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Raghavendra Bhatt, Managing Director and CEO, and Mrs. BGSS, Executive Director from Karnataka Bank, who are on the line along with the top management. Thank you, and over to you, Mr. Raghavendra Bhatt.

Yeah. Good evening, ladies and gentlemen, and thank you for joining Q1 FY27 earnings call of Karnataka Bank, an institution that has stood the test of time for over 102 years. Rooted in its legacy from the coastal city of Dakshina Kannada, formerly South Kannada, fondly known as the cradle of Indian banking, Karnataka Bank proudly stands as one of only two surviving institutions from the region's historic five original banks. From its humble beginnings to now, entering its second century of banking excellence, Karnataka Bank continues to grow stronger and is a trusted banking partner for millions across the globe. Ably guided by the chairman and the board, our Q1 FY27 results reflect a sustained quarter-over-quarter momentum driven by our stakeholders, customers, and employees. We have delivered on our investor guidance and achieved meaningful improvements across all major financial ratios, proving the power of disciplined execution and operational efficiency. Having previously stressed the need for steady, well-directed strategic execution, we are glad to note our successful delivery. Our strong growth trajectory reflects substantial operational progress, which will become clear as we walk through the financial metrics. By now, I trust you have had the opportunity to examine our financial results and investor presentation which were circulated after yesterday's board meeting. Turning to the broader financial system, the Monetary Policy Committee maintained a neutral stance and kept the policy rate unchanged during its June 26 meeting. West Asia conflict escalates risk to growth and inflation. High frequency indicators show that domestic economic activity remains resilient. Private consumption is steady and fixed investment holds strong momentum despite cost pressures. Looking ahead, supply disruptions and elevated commodity prices could impact economic activity and a potentially deficient southwest monsoon poses risk to agricultural demand. However, proactive mitigation measures like crop diversification and climate-resilient practices, alongside strong capacity utilization, healthy credit flows, and government capex will continue to support investments. Given these heightened inflationary risks, the MPC is awaiting further clarity. Consequently, we maintain a measured, cautious outlook, navigating these external dynamics with strict prudence while closely tracking inflation trajectories. Prior to discussing our business highlights, I am pleased to formally introduce Mrs. BG SS, who assumed charge as Executive Director of Karnataka Bank, effective July 15, 26. With the distinguished banking career spanning more than 30 years, her extensive experience will significantly strengthen the bank's leadership team in the journey ahead. Let me now present the business highlights. Bank has achieved its aggregate business, which stood at Rs 1,97,007 crore as of June 30, 26, up by 3% QOQ from Rs 1,92,119 crore in March 26, and up by 11% YOY from 77,509 crore in June 25, 610 crore as on 30 June 26, Reflecting a QOQ growth of 4% from Rs. 83,340 crore as on 31st March 26, and a YOY growth of 17% from 74,267 crore as on 30th June 25. Our overall strategy is to continue our focus on growing retail, AGREE, and MSME, which has grown from Rs. 51,197 crore as on March 26 to 53,172 crore as on 30 June 26. On a QOQ basis, retail agree and MSME segment during Q1 FY27 has grown by 4%, while mid-corporate advances have grown by around 5%, whereas on a YOY basis, RAM segment has grown by 12%, while mid-corporate advances have grown by around 15%. In absolute terms, MSME, housing, gold, and vehicle loans have contributed around Rs. 1,980 crores of growth to our retail segment during Q1 FY27. Going forward, our trajectory focuses on accelerating retail expansion and stabilizing the corporate portfolio by prioritizing high-quality, better-yielding assets. The bank continues to reduce low-yield corporate exposure in accordance with our earlier stated strategy. We are systematically replacing the IBPC book with higher-yielding loans to drive margin expansion. IVP's portfolio, which was at Rs. 1,618 crore as of March 26, has been brought down to 1,375 crore as on 30 June 26. Accordingly, around Rs. 243 crore have been replaced during Q1 FY27. Thank you. and 33.61% as on March 26 as against 30.8% as on June 25. The percentage of bulk to total deposits was 4.7% as on June 26 and 4.2% as on March 26 as against 5.4% as on June 25. The percentage of bulk-to-term deposits was 7% as on June 26 and 6.3% as on March 26, as against 7.9% as on June 25. Bank has continued to focus on shifting high-cost bulk deposits to granular retail deposits of less than 3 crore. The retail term deposits, that is less than 3 crore, has grown by 3 percent from 67,648 crore as on March 26 to 69,410 crore as on June 26. On a YOY basis, retail term deposits have grown by 6 percent. The bank is working towards deliberately reducing its reliance on high-cost bulk deposits and ensure most renewals are executed at a predefined card risk, thereby enabling fee ratio as on June 26th to that 78.45% as compared to 76.61% as on March 26th and 71.93% in June 25th. Net interest income for Q1 FY27 stood at Rs. 938.29 crore as compared to 842.95 crore in Q4 FY26, registering a QOQ growth of 11%. On a YOY basis, NII for Q1 FY26 stood at 755.60 crore, recording a 24% YOY growth. Net interest margin stood at 3.20% for Q1 FY27, vis-a-vis against 3.07% in Q4 FY26 and 2.82% in Q1 FY26. 6. Improvement in net interest margin was driven by the bank's focused initiatives in the RAM segment with an emphasis on enhancing yields, alongside a calibrated improvement in retail thumb deposits aimed at optimizing the cost of funds. Yield on advances for Q1 FY27 stood at 8.68% as compared to 8.78% in Q4 FY26, recording a 10-basis decrease. Low yields will be strengthened by accelerating retail growth while stabilizing the corporate portfolio through high-quality and better yielding assets. Cost of funds stood at 5.16% for Q1 FY27 as compared to 5.38% for Q4 FY26, registering a 22 basis points improvement. The sequential QOQ improvement in cost of funds is expected to be supported by our continued efforts to reduce the dependence on bulk deposits and replacing the same with retail deposits at a card race and focus on cost of build-up. P.A.T. Q1 FY27 was 418.95 crore as against 408.19 crore in Q4 FY26 with QOQ increase of 3%. There is an increase in PAT from Rs. 292.40 crore in Q1 FY26 with a YOY increase which is at 43%. Stress Lessons. Gross NPA as on 30th June 26 stood at 2.58% as against 2.78% in March 26, thereby showing an improvement of 20 basis points. The gross NPA as on June 25 was 3.46%, which is an 88 basis points improvement. Net NPA percentage as on 30 June 26 stood at 0.87% as against 0.98% in March 26, demonstrating 11 business points QOQ improvement. Net NPA as on June 25 was 1.44%, recording a 57 business points YOY improvement. The sustained quarterly improvement in both gross and net NPA ratios reflects the bank's transition efforts to curb slippage and enhance monitoring efficiency supported by the functioning of regional collection centers. Credit cost stood at 0.03% in Q1 FY27 against 0.10% in Q4 FY26. Slippage was 0.14% for Q1 FY27 against 0.20% in Q4 FY26. Standard restructure advances, including related accounts, as on 30 June 26, was Rs. 763 crore as compared to Rs. 806 crore as on 31 March 26. Regarding a 5% QOQ reduction and standard restructural advances as on 3 June 25 was Rs. 888 crore, resisting a 14% 5OE reduction. PCR. In line with the bank's commitment to increase PCR, the bank has continued making accelerated provisioning, And the PCR, excluding technical return-off accounts, presently stands at 67.03% as of June 26, as against 65.39% as of March 26. PCR stands at 84.70% as of June 26, as against 83.54% as of March 26. Cost to Income To enhance loan years is further expected to improve net interest income and support sustained control over the cost-to-income ratio. Return on equity. Q1 FY27, return on equity stood at 12.48% as against 12.69% in Q4 FY26. Return on assets. Q1 FY27 ROA stood at 1.29% as against 1.27% in Q4 26 and 0.97% in Q1 FY26. Liquidity coverage ratio LCR. As on 30 June 26, LCR stood at 169% against 165.30% as of 31st March 26 and as against the statutory target of 100%. CRE-AR was at 21.10% as on 30th June 26th, in comparison to 20.07% as on 31st March 26th. For the calculation of CRE-AR for June 26th, eligible profits as required under Extend RBI guidelines have been considered. Products. We remain on track with our product development and launch initiatives with the continued focus on bridging the remaining gaps in our products offerings. Agri scheme, entering strategic partnership with self-help groups to expand our agricultural lending portfolio while contributing to achievement of priority sector lending targets. 2. Exploring opportunities under electronic negotiable warehouse research. This aims to strengthen post-harvest financing, enhance farmer liquidity, and grow our Agree business portfolio. MSME products. We had launched three products under MSME, GST OD, Lab for MSME, Dropline OD for MSME, and two products are in pipeline, incorporation of Dropline OD features to key MSME products and digitization of key MSME products. Retail products, which are in the development stage, surrogate-based lending for housing and mortgage loans, digital document execution for vehicle loans, end-to-end portal for channel partners, up to 90% funding on project cost for purchase of ready-built, under-construction residential units, digitization of the gold loan. Liability products. Products launched, flexi-deposits for H&I customers is launched. This account automatically creates a deposit account for the amount over and above the predefined threshold. And the product under development with regard to liability, launch of virtual account facility. In ADC channel, POS Facility Part, we have entered into a Memorandum of Understanding with Pine Labs for POS Facility, launched on April 21-26. Digital and Technology. The bank is leveraging IT investments through modular and faster implementation of solutions. Bank is also exploring leveraging AI tools for improving internal efficiencies, including improving processes. Few major solutions that are in progress, new treasury application, new NPA solution, implementation of development opportunities, digital FD, secured credit cards, voice boards for sales and collections. Karnata Bank's core strength lies in its solid foundation and readiness to capture emerging growth opportunities. Over the recent periods, we have made meaningful progress by expanding our retail and MSME portfolios, rationalizing funding costs, and enhancing asset quality, establishing a robust baseline for sustained growth. Our strategy is firmly execution-led, with digital transformation and targeted product offering already gaining strong momentum. As this initiative scale, in our margins, profitability, and key ratios, liquidity, and disciplined execution, we are uniquely positioned to deliver long-term stakeholder value. Looking forward, our focused strategic roadmap and improving business momentum give us full confidence in sustaining healthy growth. To our investors, customers, and well-wishers, let me emphasize that we are not resting on the laurels of a single year's performance. We remain dedicated to building a future-ready, governance-driven institution. Thank you.

We will now begin the question and answer session. Anyone who wishes to ask If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. In the interest of time and fairness to others, please restrict yourselves to one question. For any more questions, you may rejoin the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Sushil Choksi with Indus Equity Advisors. Please go ahead.

Congratulations to Karnataka Management and BG Man for excellent performance. We have done very well on all parameters. So, we are guiding for a lot of retail growth, MSME growth, RAM, agriculture advances, and others. Our current branch network, we have not expanded despite growth areas which we are focusing on. So, first, what are we doing to initiate on that expansion? What strategy, whether it's co-lending, direct assignment? Second thing is, what is the outstanding book, what is the sanctioned and unsanctioned pipeline, which would enable growth? Because I think growth engine support is visible, but higher growth can be targeted, but our guidance seems to be a little lower. You may outperform. That is the question number one.

Yeah, good evening, Sushi Sikhi, sir. Yes, I heard you. Thank you for all good words you have spoken. Regarding branch expansion, yes, we have plans for opening around 31, 32 branches during the current financial year. One branch we have already opened. Remaining 12 to 13 branches we have plans to open before the end of H1. This is one thing. Secondly, with regard to the guidance, as you yourself mentioned, I will supplement that. We keep by and large 15% growth in the business. As I was mentioning earlier, around 10 to 15% growth in liabilities and 15 to 20% growth in advances. The continued effort will be on this only mainly, so as to arrive overall 15% growth. Secondly, as I reiterated earlier, continue to reiterate, now also RAM is the focused area. Under RAM also, we have already highlighted earlier, mainly this gold loan, housing loan, car loan, education loan, personal loans, two-wheeler, retail, LRD, and mortgage loans will be the continuous focus area. And we are, yes, as you mentioned, low promise, higher delivery. That will be continued to be our objective, and we will try to achieve that. Thank you very much for your query, I hope.

Sir, your heart to your bank's balance sheet is 69,410 crores of Q1 deposits below 3 crores. Doing a match at the high end, these are 30,000 to 35,000 customers. If you take an average ticket lower, these are 50,000 customers. In this 50,000 customers which we have in terms of term deposit, which are below 3 crores, How many products are we managing to sell? And to strengthen this base and have a greater connect, how are we targeting with new products, whether it's housing loan, sub-cruant loan, gold loan, they may not ask you, but what are other products cross-selling? And second thing, to strengthen our business in southern states where we predominantly dominate, GCC, manufacturing businesses, defense, aerospace, new emerging businesses in Apple supply chain, many other things are happening in South India, which barring one or two states in West is missing. Now, to strengthen this balance sheet, Karnataka has, and South is predominant where our strength lies. So, to capture those businesses, how are we going to emerge with new talent and new business segments whereby we can expand?

Yeah, going forward in the market, we also are aware what is happening around. Taking that into account, we are all based on the requirement. Our continued effort will be from the branch online. Some IT enablement has already been done, and some more requirements are coming based on our study also, based on seeing our peers group. And all these things are in progress. Product per customer, both banking and non-banking products, all are in the line. As I have mentioned somewhere in the presentation, one is growth in advances. The new products are in development stage. Some we have launched, I have covered it, and some more we are going to launch. In addition to that, the secured credit cards and online trading and advances against shares and mutual funds, all are in the pipeline. That is what I am telling you. Going forward, kindly wait and see. We will come out with a lot of products which are in our mind, which are mainly tailored to the requirement of the public. We are hopeful of achieving all those things.

Sir, I have noted your reduction in IBPC with replacement of new loan. And second thing, can you highlight how is recovery being visible from technically written accounts and other NPA accounts for the year? I am not asking for quarter-round order, but what would aid? And on FCNRB, if you have any color, if you are garnering retail deposits, I understand we may be not doing leverage without GIFCT,

Regarding recovery, recovery is the focused area. Having learned, we have to recover. That is one thing. Secondly, the account slipped to NPA. Priority is to recover or upgrade the account. That is a continuous focus. And having done that, we have shown substantial improvement in the previous quarter. And regarding technical return of account, also, a lot of recovery plans are there, some are at advanced stages, and our asset recovery branches at various centers, and the recovery team at head office, recovery team on the field, all will help us to recover the technical return of account. And NPA accounts. Not only that, we are regularly monitoring our standard assets also to prevent slippage. The NPA portfolio can be always managed very well, provided we control the slippages also. Controlling slippages on one side, recovery on the other side, all will add value to the books.

Sir, how much is the FCNRB pipeline and gold pipeline you didn't pay in the present pipeline?

I would request you to rejoin the call.

FCNR deposits, we have not that big portfolio, FCNR, but still we were able to garner around 60 crores of FCNR deposits. Yeah, 60 crores, fresh deposits I am talking about. Renewal, all those small, small things are there. Gold loan, with regard, I have touched upon. Gold loan is the focused area. Last year, we could not, though we have anticipated, we could not do much because of certain checks, approval from the board, with regard to as per the regulatory guidelines, we could not do much. This year, from the April itself, growth started happening. We are very much focused there also.

Participants, please restrict yourselves to one question. For any more questions, you may rejoin the queue. The next question comes from the line of Pranay Delia with Panchatantra Advisors. Please go ahead.

Sir, I wish you many congratulations for a very good set of numbers, and the hard work put in by the management is very reflective in the numbers now, which was elusive for quite some time. I have a very simple question, sir. You have given the future roadmap and the growth ahead. Can we safely say that this will be the worst quarter for us in this financial year? Good evening, sir.

I reiterate earlier also, whatever we are committing, we have a tendency to achieve it. And last year was a difficult year for us because of the negative trend in the business. Still, we could do fairly well in the last quarter. This year, going forward, I am telling you, for the past around 18 years, the April was always negative. April may continue to be negative in growth. This year, from April itself, we are positive, and the numbers are out as of Q1. I am quite confident that this year, the growth will be good, and we will try to make it better and best.

So, just to add on to this question, we are a very well capitalized bank with our capital adequacy ratio, I think, is the highest in the industry. So, will we see more disbursals or some aggressive lending happening to make good of this because we don't need any capital with such kind of a capital adequacy ratio?

Yeah. Priority is to increase the CD ratio. As I was mentioning last year also, the CD ratio dropped to 71%. Now it is around 78% plus. And going forward also, we continue to improve the ratio. And as you rightly said, CRAR is quite comfortable. We need not worry about that. Therefore, yes, focus is on increased lending.

Okay. Thank you so much, sir. And wish you the best once again. I'll fall back in queue.

Thank you very much, Pranayji.

Thank you. The next question comes from the line of Surbhi Asai Bala with Infinite Financial Services. Please go ahead. Surbhi, please go ahead with your question and unmute your line in case if you are on mute. Just please go ahead. Surbhi, you are not quite audible. I would request you to fix the issue at your end and you may join back the queue. The next question comes from the line of Vinay Nadkarni with Hathaway Investments. Please go ahead.

Thank you. And, Bhattav, congratulations on a very, very good set of numbers. Very glad to see Karnadagavan doing so well. I have just one question, and that is pertaining to the special mention account growth. Your Q1FI27 special mention account has gone up to 3,435, though you have mentioned that a lot of it has been collected in the current month, but that is a very high figure. And your SMA 2 also has gone up from 635 to 750 in a quarter when you have the lowest provisions. So, does that indicate that there would be higher provisions coming in the future quarters?

Yeah, good evening, Vinay ji. Yeah, your concern, you are right from your angle. But as I was mentioning earlier also, my first priority after joining was to improve the CD ratio and control the stress. So from around double digits, we have brought it down to single digits, and efforts are continuously on. When you talk about the stress, we always focus not only on SMA 2, we focus on SMA 0, SMA 1 also. That is the priority. To the previous question also I have answered, the NPA ratio or NPA quantum can be very well controlled, provided we control the slippage also. So, first priority is to prevent the slippage. Secondly, once we control this SMA, the slippage ratio automatically will improve. Therefore, I am quite confident, though, see, in the first quarter, what happened is, 30th June, prior to that, there were two, three holidays also. Because of that, single day or double day default, all those things are there. Otherwise, it is very much under control. So, we don't foresee or we don't require any additional provisioning because of slippage and all going forward.

Thank you, sir. Very heartening to note that. Just a follow-up question on that. How are you looking at the ECL mandate that is going to become implementable from next year? Is there any provisions that will be required additionally for that?

No. As I mentioned earlier, CR-KR is quite comfortable, number one. Number two, simultaneously, we are working on the background every quarter on quarter, and based on the regulatory requirement on all, what one percent, whatever impact will be there, we are quite capable of managing this, and stress is under control. Stage 1, stage 2, stage 3, whatever you call, all are our team. We have created a dedicated team for that. They are working on it. Even it is from 1st April 2027. We are very well ready, and I don't foresee any problem because of that.

Thank you. Thank you very much, sir, and all the best for your future. Looking forward to very great results. Thank you.

The next question comes from the line of Apeksha Bajaj with A.V. Fincorp. Please go ahead.

Hi, thank you for the opportunity and congratulations for a good set of numbers. I just want to know what led to an increase in this employee cost and what would be the normalized employee cost, despite that number of employees have reduced. Thank you.

My employee costs, I don't foresee any much change in that. Because of the yield movement and all, there will be ups and downs, which we are doing that every quarter. Because of that, some banks are following year-end and all, they are doing it, different practices are there. Whatever our auditors are suggesting, accordingly we are moving that. In the March also, somebody has asked the question, you have taken that benefit and all. We have increased the provision also. We have not utilized it for the purpose of declaring profit. So, it is very much taken care. Employee cost also, by and large, it is very well under control.

So, it will be in the same range next quarter onwards?

Thank you. The next question comes from the line of Yashwant Tipeswamy, an individual investor. Please go ahead.

Hi, Mr. Bhatt. Great set of numbers and a consistent set of results I've been watching. From the past one year, it has been consistent. So my question is, can we expect the same kind of consistency in the management? As in the previous quarter, one of our fellow investors has raised a point about your tenure extension. So please help us understand what is the status on that. And also, I would want to understand whether whatever has been raised in terms of concerns or feedback, is that being discussed in the board meetings? I just wanted to understand from the facilitator in order to understand whether the investors' concerns or feedback has been taken into the board meetings or not. Thanks, sir.

Yeah, good evening, Mr. Tipeswamy. Thank you for your good words. And with regard to the business concerns, I assure you, don't worry about that. We are with you. Whatever we promise, we deliver. That is first question. With regard to the tenure you asked, see it is a process. Last year also some people, as you rightly mentioned in the previous quarter also, people will ask so many questions. It is a process that has to be followed, that will continue to happen, and it is guided according to the best practices, best board is capable of taking all those decisions. It is very much in place. Third one is, you are raising an issue with regard to the feedback given by the investors, whether it is updated to the board. Yes, there is a system, every concern of the investor, it is the duty of the MD to update to the board. There is a system and process for that. It is being updated, and wherever possible, wherever immediate actions are required that are being taken, wherever some time is taken, we have a process to take that feedback very seriously and try to implement.

And can we consider the yield on advances to be bottomed out at 9%?

Yeah, yield on advance has gone down, and it started showing improvement. If you have seen the previous quarter, NIM has gone down in the previous quarters below 3, and in the last quarter, full year, it was not 3. It has not touched 3, but Q4, it was above 3, and further improvement has happened in this quarter, and it will continue to improve. That much assurance I will give you.

Thank you. Thank you so much for the information, sir. And all the very best for Karnataka Bank team. Thank you.

Thank you. Thank you very much.

The next question comes from the line of Jyoti Katari with Ambit Wealth. Please go ahead.

Yeah, thanks for taking the question and congratulations from Gursi Rambis. Sir, just continuing with the earlier question with respect to the continuity of the CEO, It wasn't very clear. So, if you can help us with that. So, the board is yet to approve new CEO or the existing CEO's terms, right, for future.

See, these are the things which whatever is there as the best practices, there is a guided system, guided principle, which we are updating all our investors and stakeholders by reporting this matter, publishing this through, what is that, SE filing, stock exchange filing. I think you kindly bear with me. Everything is updated. Earlier also, first time also, second time also, permanent also, all those things have been updated. Please go by that. Thank you very much.

And secondly, sir, what is your ROA, ROE target for FI 27 and for FI 28 as well, if you can help us with that?

Yeah, ROA, earlier, if you have seen, I was mentioning that 1% plus last year. 1% plus has been achieved, and this quarter also further improved. We will improve further. That much I will tell you.

But don't you think, sir, that's pretty conservative? I believe already you are at 1.3 in Q1. So, you can overshoot this 1% number.

It was 1.29 as of June. I was telling 1% plus. Now, going forward, I will tell you, since it is already 1.29, I am aiming 1.35 to 1.40.

Okay. And just one last thing on the margin side, do you see the current margins to continue going forward as well, given the fact that advances yield have largely, you know, as you mentioned that, they are likely to improve. So, in that scenario, we can expect the margins to improve from the current level?

Yeah, because last year, for various reasons, Once it was down, and in the Q4, results started happening, and you have seen in Q4 also it has started showing improvement. In the current quarter, it has further improved. Going forward, taking into account the quality of the account which we are onboarding, and recovery happening and all, and we will continue to improve further. That is the assurance from my side.

Okay. Thank you.

Thank you very much.

The next question comes from the line of Parth Gutka with 361 Capital. Please go ahead.

Yeah. Hi, sir. Thanks a lot for the opportunity. Sir, my question is, in this quarter also, you know, the corporate, large corporate growth has been very strong. So, are these short-term loans linked to T-bill or some short-term rates or they are linked to MCLR?

See, this rate, last year also to give stability to the, there was a negative growth, so depending upon that, I was answering to the investors in the call that we want the growth also, stable growth also, we should not compromise on the yield. So, we managed last year fairly well. Going forward, as I mentioned previously in my presentation, our focus is on retail and mid-corporate only. But having said that, there will be repayment also, conscious decision based on the tenor, conscious decision based on the yield. We will focus that and we will continue to work that. But to your question with regard to the bulk advances, I am telling you our focus is to reduce it only, duly offset by the retail. Retail will not happen so easily, retail and mid-corporate. To the extent of repayment, we may have to take the bulk portion. We will not grow size-wise. Percentage-wise, we will reduce it. Duly offset by the retail and mid-corporate.

Sure, sir. But our mid-corporate book is also de-growing on a YOY basis over the last four to five quarters. So, by when can we expect the growth within mid-corporate to pick up?

No, last year, during the first two quarters, it was negative. I totally agree. Third quarter, it by and large moderated. Fourth quarter, it has shown growth. Now, this is the fifth quarter of mine. Fifth quarter, it has grown further, and we have a lot of actions happening on the ground. With that, I am quite confident that it will grow. Even retail, it was 46,973 crores as of March. It is 48,622 crore now, June quarter. So also mid-corporate, it was 15,721 crore. Now it is 16,636 crores. Large corporate, it was 20,646, it was 21,352 crores. This is a decision, conscious decision taken by the bank while improving the retail and mid-corporate. We have to keep the growth continuing. That is the only reason. Otherwise, percentage-wise, we don't want to increase the percentage. We want to increase in retail and mid-corporate only.

The next question comes from the line of Manoj Yedanapuri with Infinite Financial Services.

Hello. Hello. Good evening. Yeah, am I audible?

Yeah, good evening, Mr. Burj. I just have one question that with the gross advances part, so your retail, agri, and MSME grew at around 12%, right, this quarter, as compared to other segment, which was around 25.2%, 3%. So, if you can compare that with the Q4 last quarter, retail grew at around, retail plus MSME and aggregate grew at around 4%, and other parts grew at around 14.26%, if I'm not wrong. So, if you see, that's more than double the RAM pace, like with the both quarters, and the gap is obviously widening. So, given that the bank has repeatedly stated that RAM has been a, you know, strategic priority, so what's your, like, what's actually delivering that 25% growth in other segment is you could elaborate on that part.

You mean to say retail or mid-corporate?

I mean with the address part, hello? Am I audible?

Yeah, yeah.

I just wanted to understand that.

Hello, I got it. I got it. In the retail, mainly retail, gold, MSME, and this housing, I have mentioned earlier, housing, car loan, education loan, personal loans, two-wheeler loan, retail, LRD, some extent, retail, mortgage loans, all these mixtures are there. And overall focus is on those things only. Some of the new products also have been launched to ensure improvement in the tat. Because retail growth will not happen so easily unless the machinery in the ground to improve the tat and all will happen. So, I am telling you, with regard to, as you rightly mentioned, retail growth was Q on Q. In the last quarter, it was 3.9%, YOY growth was 11.8%. Gold loan, it was last quarter 9.3%, and YOY 35%. Retail, this other retail, as I was mentioning housing, car, education loan, personal loans, two-wheeler, all these put together, it was at 2.5% in this quarter, YOY 7.7%. So also MSME, in the quarter it was 4.9%, YOY 7.6%. Our continuous focus is on this area only. So, to show the growth, it has to come in volume. That volume will not drive so easily. Large and corporate, it is an easy banking to elaborate on that part.

And given that, so at what point do you think that trams, you know, starts growing faster than the corporate part?

See, over a period, it was there. Suddenly, we cannot reduce. We have to balance the growth also. While moving forward, it is a continuous journey of the bank that we want to grow in retail and mid-corporate. And for that, what we had done during last year, immediately after taking over charge, this retail hubs, which were started in all 15 centers, 15 centers, I mean, bank has got 15 regional offices across India. In all those centers, we have started that. It started driving the business, actually. That is why I am quite confident that retail growth will come as per the expected line.

Understood. That is from my side. Thank you. Thank you.

The next question comes from the line of Chirag Single with First Water Fund. Please go ahead.

Hi. Great set of numbers, sir. Congratulations to you and the entire team.

Hello, Chirag. Good evening. Can you be a little bit louder? Can you hear me now? Yeah, now it is. Yeah, please.

Yeah. Hi, good evening. Congrats to you and the entire team. Great set of numbers. I think this is the second consecutive quarter you have delivered more than 1% ROA. So you gave a guidance that you are now going to aim for 1.35 to 1.4% ROA. So, is this more like an exit trend rate for this year or something that you are seeing for the entire year, like 1.35% plus R way for the entire current financial year?

Our effort will continue to drive like that only. Continuous improvement.

Does that answer your question, Chhara?

Yeah, yeah, that answers. One more question on the employee cost. So, the employee cost that, you know, went up in the quarter, so what should be the annual employee cost that we should factor in for the current financial year?

Employee cost has not gone up. I have mentioned earlier, because of the yield movement under that provision for gratitude and other retirement benefits and all, That yield movement and all. Employees' cost is very much under control. Employees are the strength of the organization and cost is under control. They are made rather to improve the productivity. All those things are very much in place. Cost is under control.

Thank you. Ladies and gentlemen, we will take that as the last question for today. I would now like to hand the conference over to Mr. Raghvendra Bhatt for the closing remarks.

Thank you very much. And to our investors, my message is, as already highlighted, we want the continuous journey of growth. And as highlighted by me earlier, growth in all areas, both in liabilities, assets, guidance I had already given, continuous efforts for recovery, continuous effort for slippage, and improving continuous effort for recovery under NPA, As well as technical return of account and improving the other income through third-party products, all these products, all these through all these sources, bank is quite confident with my team. I am able to drive this business forward. That is an assurance from my side. Thank you very much. Thank you one and all.

Thank you, sir. Ladies and gentlemen, on behalf of Karnataka Bank Ltd., that concludes this conference call. Thank you for joining us and you may now disconnect your lines.