Karnataka Bank Q4 FY26 PAT up 62% to ₹408 crore

Stock reaction: Karnataka Bank shares rise on results

Karnataka Bank shares gained after the private sector lender reported a strong set of Q4 FY26 numbers, led by higher profitability and improvement in key operating metrics. The stock rose 2.56% to ₹254.85 in one reported trading session after the results were tracked by the market. Another market update in the same results cycle also referred to a sharper move of about 5% on the day. Separately, the stock has rallied over 26% on a year-to-date basis in 2026, outperforming the NIFTY50 index, which was reported to be about 6% lower over the same period. The move came as investors focused on the sharp year-on-year jump in profit, better margins, and improving asset quality.

Q4 FY26 headline numbers: profit and operating performance

For Q4 FY26 (quarter ended March 2026), Karnataka Bank reported standalone net profit of ₹408.19 crore. This was up 61.74% year-on-year and 40.37% quarter-on-quarter, as per the quarterly disclosure referenced in the report. Another data line in the same information set cited net profit of ₹408.25 crore versus ₹252.62 crore a year ago, pointing to the same broad outcome: profit rose roughly 62% year-on-year.

Pre-provision operating profit, also referred to as operating profit in the report, came in at ₹615.04 crore in Q4 FY26. This was up 64% year-on-year from ₹375.02 crore and up 36.13% sequentially from ₹451.80 crore in Q3 FY26. Provisions increased to ₹90 crore from ₹31 crore in the year-ago quarter, showing higher credit cost provisioning even as the bank delivered higher operating profit.

Income trends: total income mixed, NII improves

The bank’s total income fell 2.4% year-on-year to ₹2,656.18 crore in Q4 FY26, while rising 5.31% quarter-on-quarter from ₹2,522.35 crore in Q3 FY26. A separate operating income line within the same content set showed total operating income at ₹2,257.32 crore for the quarter, nearly flat versus ₹2,258.46 crore in the year-ago period, indicating different reporting cuts being referenced across sources.

Net interest income (NII) rose to ₹842.95 crore in Q4 FY26. This was up 7.98% year-on-year from ₹780.68 crore and 6.43% quarter-on-quarter from ₹792.06 crore. The improvement in NII mattered because it supported the jump in quarterly profitability even as headline income was mixed.

Margin improvement: NIM moves higher

Karnataka Bank reported net interest margin (NIM) of 3.07% in Q4 FY26. This was higher than 2.98% in Q4 FY25 and 2.92% in Q3 FY26. The sequential improvement in margin, along with higher NII, was a key driver of operating performance during the quarter, as reflected in the rise in operating profit.

Costs and provisions: provisions up; employee cost referenced

While provisions rose to ₹90 crore from ₹31 crore in the year-ago quarter, operating profit still climbed sharply. One of the reports attributed the year-on-year operating profit improvement largely to a sharp drop in employee expenses for the quarter. The result was a stronger pre-provision operating profit base, which helped absorb the higher provisioning without hurting reported profit growth.

Asset quality: GNPA and NNPA improve

Asset quality improved year-on-year, based on the reported non-performing asset ratios as of March 31. Gross non-performing assets (GNPA) declined to 2.78% at the end of March 31 from 3.08% a year earlier. Net NPA improved to 0.98% from 1.31% over the same period. These ratios supported the market narrative of improving balance-sheet quality alongside profit growth.

FY26 performance: annual profit hits record; management comment

For FY26 (year ended March 2026), Karnataka Bank reported annual net profit of about ₹1,311 crore. Figures in the provided information set included ₹1,310.50 crore, ₹1,310.75 crore, and ₹1,311 crore, all pointing to an all-time high annual profit around ₹1,311 crore. This compares with about ₹1,273 crore in FY25, with one line stating ₹1,272.84 crore in the prior year.

Raghavendra S. Bhat, Managing Director and CEO, said the bank achieved an all-time high annual net profit of ₹1,310.50 crore, reflecting the strength of its business model, focused growth strategy, and emphasis on operational efficiency.

Dividend announcement: ₹5 final dividend proposed

The bank’s board recommended a final dividend of ₹5 per equity share for the financial year ended March 31, 2026. The report noted this represents 50% of the face value of ₹10 per equity share.

Balance-sheet update: deposits, CASA and advances (provisional)

Alongside earnings, the information set also referenced a Q4 business update (provisional) as of March 31, 2026. CASA deposits rose 10% year-on-year to ₹36,621 crore from ₹33,281 crore and increased 11.5% quarter-on-quarter from ₹32,829 crore as of December 31, 2025. Total deposits grew 3.8% year-on-year to ₹1,08,841 crore and were up 4.5% sequentially. Gross advances stood at ₹83,337 crore, up 6.9% year-on-year and 7.8% quarter-on-quarter.

Key numbers snapshot

Market impact: what investors tracked

The immediate market focus was on the jump in quarterly profit and the operating profit growth, which outpaced the growth in NII. Investors also tracked the margin improvement to 3.07% and the decline in GNPA and NNPA ratios as indicators of better asset quality. The proposed ₹5 final dividend added an additional data point for shareholders following the result. The reported year-to-date rally of over 26% in 2026 framed the results within a broader period of strong stock performance.

Why the results matter for the banking sector

Karnataka Bank’s Q4 FY26 performance highlighted how margin improvement and stronger core interest income can translate into materially higher profitability even when total income is mixed. The quarter also showed that operating leverage and cost control can meaningfully lift pre-provision operating profit. At the same time, higher provisions indicate the bank continued to allocate buffers even as asset-quality ratios improved. For investors tracking mid-sized private sector banks, the combination of stronger profitability and improving NPA ratios is a key part of quarterly assessment.

Conclusion

Karnataka Bank closed Q4 FY26 with net profit of about ₹408 crore, operating profit of about ₹615 crore, improving NIM, and lower GNPA and NNPA ratios. For FY26, it reported an all-time high annual profit of around ₹1,311 crore and proposed a final dividend of ₹5 per share. Markets will continue to track subsequent disclosures for the bank’s operating trajectory and any follow-through on business growth metrics referenced in its provisional March 31 update.