Karnataka Bank Ltd (NSE: KTKBANK) Q3 2025 Earnings Call dated Jan. 31, 2025
Corporate Participants:
Srikrishnan Hari Hara Sarma — Managing Director & Chief Executive Officer
Sekhar Rao — Executive Director
Analysts:
Priyank Chheda — Analyst
Manik Bansal — Analyst
Rishikesh Oza — Analyst
Yash Dedia — Analyst
Subhan Shirati — Analyst
Ameya Chheda — Analyst
Anand Mundra — Analyst
Anand Dhama — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, please stay connected. The conference call will begin in next few minutes. Thank you. Ladies and gentlemen, you’re connected for the Karnataka Bank conference Call. Please stay connected. The call will begin in next few minutes. Thank you ladies and gentlemen, good day and welcome to Q3 FY 2025 Earnings Conference Call hosted by Karnataka Bank. 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 the 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 Sri H, MD and CEO from Karnataka Bank. Thank you, and over to you, sir.
Srikrishnan Hari Hara Sarma — Managing Director & Chief Executive Officer
Thank you, Vishi. Good evening to all, and a very, very warm welcome to our Q3 FY ’25 earnings call. I have with me in the conference our Executive Director, Sheikhar; our CFO, Abhishek Bakshi; our Chief Compliance Officer, Vinay Bhat; our Head of Credit, Ravi Chandran; our Head of Branch Banking,; our Chief Risk Officer, and we also have our Company Secretary, who is Shyam. We also have our Investor Relationship Head, Soham Roy with me. Welcome to all once again. We also want to take this opportunity to wish you all a very, very happy 2025 and a great year ahead. As all of you know, the bank, we’ve been working with will renewed energy on the overall restructuring and transformation processes are really end-to-end looking to-end this financial year ’25 on a real high note. The bank has continued to see the progress in top-line growth with a lot of focus on retail and direct-to-corporate advances and this is a strategy that we had mentioned in the last two quarters and it has started playing out now, along with a lot of mobilization on retail deposits. There are a lot of this process transformation projects which are underway, covering credit processes, national back-office, which has been set-up in Mangaluru. We have created the sales in the product organization, which are functioning well. We have opened two retail asset centers, one in Bangalore and the other one in Mangaluru yesterday and with three other locations which are being progressed. And there is significant progress which has been achieved in each one of these projects and we will hope to see the benefits in the upcoming quarters. To support this growth, we have really enhanced our tech infra ops capacity, operational capacity and all the enhancements that we had to do have — are in-place. So the commitment to digital and the tech focus has actually been reflected by the fact that our bank has won in this quarter, a couple of awards. I’m just going to call-out a few. The ETBFSI Exceler Award for outstanding work-in leveraging data for Growth, the 19th Summit Award for Best Innovation and Partnership Initiative; Samwa 2024 Account Aggregator Ecosystem Award for financial Inclusion. The bank actually created history by winning six categories of IBA. It’s the Indian Bank Association Banking Technology and Citation Awards held earlier this month. And the six categories are tech Talent Organization, best IT Risk Management, technology bank, best fintech and DPA adoption, best digital sales, payment and engagement and best AI and ML adoption. So these are all very, very, I would say, good credentials to grow with and this is a good reflection of the effort that the bank has put in terms of the investment to upgrade our technology stack and digital and the analytics part of it. The bank has been upgraded by ICRA two notches from A positive to A-plus positive and that actually will facilitate competitive rates and for our bidding in the future as we go-forward, whether it is Tier-2 or even certain forms of deposits. So the bank is seeing a substantial improvement in book quality on the back of good collection and recovery efforts. I will talk about the actual numbers as we go-forward. This will continue to improve further with our transformation and our credit sanction and collection mechanisms. The bank has opened six new branches this quarter, taking the overall branch count to 937 and we plan to open about 10 to 15 new branches in this quarter-four. Now during quarter two, I had mentioned very clearly that the bank had taken a step-back to focus on-book quality over quantity and over revenue growth. Now we are back on-track as far as the growth trajectory is concerned, but in selected areas that will result in improvement to various metrics as we go-forward. The bank will definitely try to strike a balance between book quality, growth and also hope to see the advances book grow by about 12% during FY ’25 on a consolidated overall basis. On the backdrop of lower GDP projections and the banking industry witnessing pressure impacting credit growth, lower CASA, et-cetera, the bank continues to focus on our critical parameters. One is growth in advances for the segment that we serve, deposits, improvement in quality of our advances book, profitability and of course, favorable returns to our shareholders. I will now start presenting the business highlights. The business highlight is that aggregate business turnover, as we Call-IT, which is advances plus deposits stood at a record all-time high of INR1,77,978 crores. It is up by 10% on a year-on-year basis as against INR161,936 crores as of December ’23 corresponding period. The PAT has decreased from 331 in the corresponding quarter of last year to 283 and the decrease is explained by the fact that there are certain changes in the accounting policies and also the bank has been making, as you’re all aware and I did mention earlier, accelerated provisioning that impacts PAT and which we have continued in this quarter also. So on a nine-month basis, the bank made about INR1,020 crores of PAT compared to INR1,032 crores for the corresponding period last year. The accounting change on treasury, which is essentially for, you know, the securities which are there in the AFS book alone. If we had taken into account as per the earlier policy, we would have actually gained about INR100 plus crores on that itself. So which means that the bank technically would have made INR10 crore-plus INR100 crore, that’s INR1120 crore for this quarter. But this is of course applicable to all banks. So this is something that I needed to call-out to make sure that on an overall basis, the bank is in a good kind of place. On the gross advances side, the bank has started the engine again after the Q2 cost that we had taken. The gross advances stands at INR77,859.75 crores as of December ’24. On a Y-on-Y basis, this growth is 11.6% over December ’23 and that was INR69,740.97 crores. This is very much in-line with the overall industry growth on year-on-Y. Our overall strategy on this gross advances continues, which is growing the retail, agri and the mid-market, the RAM segment, where the growth was really led by retail housing gold loan portfolio for the bank. The net book accretion was INR4,020 crores on a year-on-year basis in the RAM segment alone. The bank in the past, we had committed that we will reduce our exposure to low-yield large and mid-corporate loans that were opportunistic because as you’re all aware, sometimes which was like April of last year, our CD ratio was in the mid-60s and we had pushed it up to the mid 70s. So we took an opportunistic tactical strategy there where it was deployed into low-yield corporate loans, which were far more easier before our setup of our full-fledged wholesale and corporate — mid-corporate banking groups, which has been done right now. So we had to deploy it into low-yielding corporate loan, which is better than treasury from an earnings perspective and also the book growth. But right now, we are doing a churn where very clearly the churn is reflecting in our overall story. So we now have the regional sales and the credit structure that we have put in-place for direct to corporate acquisitions from our mid-corporate segments. And this will — actually this book will also increase and I’ll also let you know the progress that we have made. So overall, on a quarter-on-quarter basis, retail advances as per the RBI definition in Q3 had grown by 4% and mid-corporate had grown by 1% and we’ll continue this momentum. So during the last nine months compared to, let’s say, March ’24, the retail advances alone has grown by INR4,164 crores. That’s like in 3/4 actually the retail book has grown by INR4,164 crores. And the bank also has approximately replaced INR750 crores of the loan — low-yielding advances, larger corporate or NBAC advances with the higher-yielding direct to corporate advances. So technically, the book, while it has not grown, but there is a churn in the book, which is already seen. And then as we go-forward, when the actual acquisitions from the mid-corporate advances begin and when all these are out, we will actually see the book accretion also. On the aggregate deposits, the bank position stands at INR1,118.5 to repeat INR1,118.52 crores as on December ’24. And this is a year-on-year growth of about 8.59%. And this from a December ’23 number of INR92,195 crores. It is a good increase. CASA deposit stands at about 30.32% as against 30.82% in September, but it is also notable that in terms of absolute growth in CASA compared to the last year December ’23, we have grown by 4.68%. So this has to be looked at in the context of the industry where the larger banking industry, there is overall in CASA deposit, which has been declining and from March ’22 position of 43.66%, it has declined to 39%. And in Q4 FY ’24 alone, the share of the industry-wide CASA dip by about almost 2.71%, that’s like 271 bps. So on the trend is continuing. But having said that, we do have a strategy and that strategy is also playing out where we are actually replacing a larger part of our pulk, so-called higher-value deposits by retail granular deposits. And this is a strategy that where by the rates for the granular are card rates. And as a result, the bank has been able to kind of really shift the focus and focus on deposit — granular deposits of less than INR3 crores. So bulk deposit as a percentage of total deposit in the bank has come down from 8.51% as of September ’24 at the last quarter to 7.06% and this will continue to go down as we play-out that strategy. Similarly, bulk deposit as a percentage of term deposits has come down from 12.31% as of last quarter to 10.18%. So just to summarize, while the market conditions remain as it is, our aggregate deposit growth, while it is flat, but we have seen the movement from bulk deposits to granular deposits. Retail term deposits, that’s like which is less than INR3 crores — INR3 crores has seen a visible jump from INR60,604 to 62,604 and this has been over the last quarter, which is a net Q-on-Q accretion of about over INR2,070 crores. So this is a good sign and the retail engine, which is both the asset engine as well as the liability is all being driven by the sales team, the branch team as well as the digital acquisition. So all the three engines are currently going on and that is reflecting in a good churn, while it might not have a book growth on the deposit, but I think it is heading towards a very good mix as far as our overall liability strategy is concerned. The liability strategy is also being supplemented with new product development and launches. So we are on-track to launch a few more products in the last quarter of this year than Q4. We have on the corporate side, the supply-chain finance program, which is about to be launched. We will also launch in this month the KBL women’s savings account, Flexi recurring deposit program, a family banking program and we are also working on MSME app, which will also serve our MSME segment. So those are all liability oriented mostly, except some of this which is also asset oriented like the supply-chain program. The net interest income for the bank, which currently for this quarter was INR792.78 crores. While there is a decrease, but there is also an acceleration, the decrease was about 4.21% compared to the year-on-year figure of INR827.6 crores. But having said that, if you really look-through this, the fundamental reason, while it can be that our cost of funds and cost of deposit has increased, which is a market phenomenon, but there is also from September because of the RBI regulation, we are not charging interest and we are charging a penal charges. So the interest element of all of our various charges that we’re having to the borrowing customers used to be part of NII, but that has come into the other income. So just to kind of give the perspective with the numbers, the NII reduction, due to this change in the accounting and in the charging mechanism from — to — from interest to P&L charges, for Q3 FY ’25 alone, which is this quarter was around INR24 crores and INR38 crores for the nine-month period because of the September and October event that we started with. So if you exclude this, the NII would have remained more or less stable on a year-on-year basis. Our NIM, that’s the next one, the net interest margin. So the net interest margin stands at 3.26% for the nine-month period versus 3.59% for the nine-month period. This has decreased, but fundamentally due to the increase in cost of funds and cost of deposits, but also it is a fact that there is another part which is the reclassification of the P&L charges that I had talked about. So had we actually included this under the NII and then the NIM calculation. On a nine-month period, actually our NIM would have become 3.31%. So technically, we are maintaining the NIM more or less at the same level despite the pressure on the cost of funds. But with our improved focus on higher-yielding retail and direct to corporate deposit, on a combined basis, we expect that the ease — this will get eased out a little bit as we move into the next few quarters and we expect that the NIM would improve by at least about 10 to 20 bps depending on the kind of churn that we are doing in the corporate low-yielding loans as well as the retail loans that we are booking. Coming to the loan yields, our strategy continues, as I said earlier, about replacing the bulk opportunistic larger advances, two PSUs and larger companies, two direct-to-corporate and retail advances. There are two RACs that we have set-up already, the retail asset centers where we have started deploying corporate DSAs as our business partners and we do have dealer and builder tie-ups and on the retail engines are running at full steam at least in this location, which is Bangalore and Mangalore. We will do it in three other locations in the following quarters. And with a lot of these product launches that we have planned in Q4 and thereafter on the high-yielding segments like mod gate vehicle loans, educational loans and so on, we will see further traction as we evolve. So our strategy of replacing low-yielding NBFC advances with direct-to-corporate advances will also continue that will also result in better yields. So considering the potential churn, we expect that there will be an overall portfolio loan yield increase of at least about 20 to 30 bps as we go-forward. So this is I guess the strategy that we had already outlined in the last couple of quarters, along with some investor conferences and one-on-one meetings that we have had and we continue to play this up. Our CD ratio has gone up to 77.77%, which is a welcome sign. The fact that we are actually stretching the balance sheet as much as possible. There is still scope. We still can go up to 80% to 85% and we do have the liquidity coming from the deposit side also because the retail deposit portfolio is growing, while the overall liquidity and even as we speak today on a daily basis, we are surplus and treasury lending into the market. And just for records, the CD ratio for the previous quarter was 75.34% and for the last year, it was 75.64%, so that is the increase that has happened. This part of the conversation that I’m doing in the commentary is the — the most important piece from the bank side, which is to improve the quality of our book. So as far as the stressed assets is concerned, we have made some significant strides to improve the book quality. The gross NPA has actually improved to 3.11% in December ’24 quarter from 3.21%, that’s like 10 bps lower. The same was 3.64% as of the last year December ’23 corresponding quarter. Similarly, the net NPA has also continued to improve. It has come to 1.39% as of December 2024, down from 1.46% and it was 1.55% as of December ’23. So here again, we are seeing. So we have committed to the investors in the past and we continue to stay with that commitment that we would become closer to 3% and closer to 1% as far as this two, which is the GNP and the NNPA is concerned by the end of this financial year and in the following quarter. So this is something which will result due to a significant improvement in the overall NPA numbers. The details about the NPA movement are there available in our investor presentation with the details of the opening balance and the reduction and so on and so forth. Calling out the next important parameter on the spreads assets is a gross slippages. So the slippages have come down and this has come down to 0.4%, that’s 40 bps in-quarter three FY ’25 as against 8.8% in the quarter three of you know last year. So for the nine-month period December — ending December ’24, the slippages ratio stands at about 1.35% as against 1.9% for the nine-month period that ended as of December ’23. So the target for FY ’25 would be that slippages will remain well below the 2% mark. And actually speaking, we could even do better as you know the quarterly slippages are coming down to about 0.4% to 0.5%. So that’s something that we look-forward to and that’s a very tight control because of our renewed recovery as well as our collection mechanics. Talking about recoveries, the recoveries for the quarter has been INR101 crores and versus INR99 crores as of the previous quarter and as again INR148 crores in the corresponding quarter of last year. Over the nine-month period, the total recoveries excluding upgraded accounts has been INR382 crores. There is also another element, which is the stressed asset book, which we have discussed in the past and presented, which is on our standard restructured advancement. So the bank, as you are all aware, post-COVID called out or during COVID called out of INR4,500 crores of restructured assets and that number has come down on a standalone basis without related accounts to INR939 crores as of this quarter, December ’24 and as compared to INR105 crore INR1051.86 crores as of the previous quarter and as compared to INR1,521.56 crores as of the December ’23 quarter, including related accounts, which are actually performing, but on the other side, due to the regulatory requirement, we need to classify as restructured. The standard restructured advances, including related accounts stands at INR1,113.65 crores as of December compared to INR1,268.15 crores. So there is a reduction in this also and as against September — sorry, December of ’23 when it was INR1,837 crores. One of the ratios that we would like to really tell all of you is that if you combine the GNPA plus the restructured asset as a total overall percentage of our gross advances, it is currently at INR4.54 crores — 4.54% compared to the previous quarter of 4.89% and compared to 6.27% of the previous quarter corresponding last year. So this is a significant improvement. And as all of you are aware, the restructured as well as the GNPA we have provided for as per the prudential requirements that are there as per the regulatory requirements. The bank’s PCR, which is a provision coverage ratio, including technical write-off, stands at INR80.64 crores in December compared to INR80.14 crores in September. And this is excluding technical write-off and the PCR excluding — excluding technical write-off stands at as compared to the 55.15% in September of ’24. As far as LCR is concerned, the liquidity coverage ratio. As of 31st December, we stand at 152%, up from 143.93%, which is actually good news and also as against statutory target of 100%. The bank’s cost of funds stands at 5.69% for the quarter compared to 5.58% for the previous quarter and 5.49% for the corresponding in-quarter of the previous year. But for the nine-month period, it stands at 5.61% compared to 5.36%. Definitely, there is a 25 bps difference and that is where the NIM is also under pressure and that would get eased out by the growth in CASA as well as the retail term deposits as we go-forward. So with our reduction in the dependence on the bulk deposits and replays with retail deposit at card rates and the CASA buildup, we should see definitely improvement as far as the overall number is concerned. One of the other significant metrics that we need to let you know is the credit cost. The credit cost stands at 0.12% for this quarter FY ’25, which is Q3 and as against 0.09% for the — in a previous quarter and 0.25% for the previous year corresponding quarter. So the total credit cost for the nine-month period has come down and it stands at 0.32% as again 0.67% for the nine-month period corresponding in the last year. So with our continued control on slippages, the credit cost is targeted to remain lower and we believe that we would be closing out lesser than 0.5% for the entire financial year 2025. Cost-to-income, this is the next metric. For the Nine-Month period ended, the cost-to-income ratio stands at 56.93%, while we have had a lot of elevated cost one-time related to investments in technology or whether it is a couple of other lateral recruitments and so on. I think we are stabilizing here. While the operating expenses have remained stable on a quarter-on-quarter basis, the increase in interest expenses is also one of the reasons that the cost of fund, the cost of deposits, again, combined with the decrease in the market yield has impacted the cost-to-income ratio. The bank has taken multiple cost rationalization efforts to continue renegotiating on various commercials and keeping the operating expenses under check. So with the strategy is to increase NIM and NII as we talked earlier, I think the bank projects to have a cost-to-income ratio come down to about 55% in the upcoming quarters. And this would actually stabilize there and then start coming down as we grow our income level as well. So there are two other metrics as far as the bank is concerned. One is the ROE, which is the nine-month ROE stands at 11.96% versus 15.18%, here again, one primarily due to our capital raise as well as the fact that we have the actual financials, which we have performed for the nine months, but we see that improving as we go-forward. On the ROA part, the nine months 9th ROA stands at 1.14%. We were higher, but this is again a dip that is, you know, coming only from the overall performances and this was about 1.29% in the nine-month period for the last year. But this is fundamentally because of the book growth that we are seeing and we expect to close this financial year anywhere between 1.1% to 1.2 and 1.2 has been the guidance and I think we are well on-target to kind of get there. We will see this improvement both in ROA and ROE in FY ’26, supported by continued accretion as far as the higher-yielding RAM segment, movement of bal to retail deposits and also leading the — leading to improvement in NII and NIM and also increase in other income. Our last metric from today’s commentary is on capital adequacy, CRAR. We stand at 17.46% as of this quarter. Tier-1 is 15.84% within the breakup and Tier-2 is 1.62% in comparison to 17.58% as of the quarter previous quarter. And here again, if you plow back the profits for the last 3/4, our capital adequacy would be anywhere upwards of 19%, 19.06% actually, but that’s of course to be counted only after the balance sheets are done. So as we speak today, I just want to conclude by saying that the bank has had a strategy on growth. The bank has had a strategy on transformation. The bank has had a strategy in terms of improvement in-process, product, technology, capital, operational capacity, the people, leadership and so on. All the investments have been done and all of those transformative steps are playing out in their own tracks. But combined, put it together, we are actually getting there and we are seeing the trajectory change. As we say that in a hockey-stick, we are actually seeing the trend where we are actually growing. So it’s like the kind of reverse hockey-stick and we are just kind of climbing from here. So we believe that in the following quarters, we will be able to improve on multiple metrics and that will result in positive and better financial outcomes. So on that note, I wish to thank you all for your patient hearing and we would request to throw the forum open for questions that any of the investors and any of the participants may have. Over to you, Yassesri.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchdown telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Priyan from Valum Capital. Please go-ahead.
Priyank Chheda
Hi, Steve. My question is actually on the strategy on the loans as well as on the deposits. Now on quarter-on-quarter, if I have to actually judge because it’s very difficult to judge on a nine months or even compare it Y-o-Y because all the efforts that we are putting out should be seen incrementally every quarter. So incrementally, this quarter we have disbursed or we have a loan ending book of more than in — the book has increased by INR2,500 crores. Now the incremental loans has been into retail and large corporate, both equally. Now if we are on the strategy to focus more on RAM, why the yields on loans have fallen by-18 bps quarter-on-quarter, I believe we are looking-forward for a better yielding retail loans. So that’s question number-one. On the same side, deposits, the cost of deposits is actually gone up by-10 bps and we are — we are incrementally focusing on retail granular deposits. So just help me with this two very contrasting thought process that I’ve come across.
Srikrishnan Hari Hara Sarma
So thanks, Priyanka. I think there are two-parts to this question. One is on the advances side. So as you know, you’re right that we have grown the quarter and grown the quarter with a whole lot of improvement as far as the overall retail book is concerned. But it is also a fact that there was NBFC and the rest of it, which got paid out during the same quarter. So as a result, while the number that we have put up, it has happened over the quarter for it to play-out for the full-quarter would happen only in the following quarters. It doesn’t happen immediately in the same quarter. So the real increase in the NII would happen as we kind of get into the full three months as far as these loans are concerned, because this is a continuous process. So that is one explanation. The second explanation is that this entire increase which has happened, which is between the previous quarter Q2 and Q3, while it has happened, now there is also a housing element within that. So there is a breakup of the overall retail book, which comprises of housing, mortgage, which is LAP and the rest of the other products and as well as the vehicle and your gold loan. Now there are different yields as far as each of these are concerned.
So the mix within that also, we need to kind of really perfect it as we go-forward because if you do much of housing, then the yield will be not as much. But then we look at a blended yield as far as the retail accretion, the RAM is concerned. Now with setting up our RACs, the whole process is getting streamlined location-by-location and we would actually start focusing on high-yielding and making sure that our turnaround times and staying competitive on the rates both are balanced out and that is how we will kind of progress. So this is a strategy which is just started and which will start playing out in-full steam as we go-forward. As far as deposit is concerned, the deposit number, while it is like we are running faster, but staying at the same place because of the fact that we are relatively flat on the overall number.
But the fact is that today, you will have to look at that even a retail deposit in the market is also high in terms of the expectation because we do have retail deposit at 7.5% and our senior citizen product which is at 8%, which is the 50 bps that we have to pay extra for the senior citizens. So it is not as if that the bulk deposits are expensive and the retail deposits are relatively inexpensive. That is not the way. Now it is a fact that the retail term deposit brings in more stickiness because along with it comes CASA, along with it comes other benefits for other income, for instance, the third-party income that we have. So we do have — in fact, the third-party insurance business, which is both life and non-life on the other income which is reflected. Actually, while it is not a significant number, but from a comparison between last year and this year, the entire target for this year has actually been met in November and December itself.
So which means that we are running much in excess of the overall budget. So we are doubling as far as that is concerned. So there is a revenue that gets accrued for this relationship that we are building for other products also, which is the cross-sell. The other last part is that, you know as far as the mix is concerned, you know, as long as the dependency on the bulk deposits is coming down, which it is in terms of the percentages. Then what happens is that the granular stickiness and the funding part is assured as far as the bank is concerned. So we have actually had two flat quarters while many banks in the country have actually declined in terms of the deposit growth and many banks even this quarter have reported about 1.2% to 1.3% per quarter in terms of the increase in the overall deposit number. And that is not the case with us.
We are moving ahead and we are actually churning and the real benefit of that again will start playing out in the following quarters. So all that I am saying is that we do have a very conscious strategy, both in terms of the quantity and the quality part, which I clearly alluded to earlier. So this is something which we have taken stock of the entire bank. We have taken charge. We have now got all the engine firing, which is a branch sales product as well as the digital and we believe that we are on the right track to growth.
Priyank Chheda
Okay, perfect. Thank you for the elaborative answer, sir. My other question is actually in fact, as per your notes, if we had to exclude the impact of accounting policy, our cost-to-income still would have been at 58.7% for Q3. While we had guided for, say, in for H2, we are looking for a less than around 55% cost-to-income. So where are we and what has been the extra cost that we should take into consideration when it comes to Q3 plus, would it be possible to kind of call-out the one-time extra expense that bank would have done in this last nine months, which would not get carried forward going ahead, so that we know that kind of a kind of a absolute cost that would come down, of course, then the other costs related to the operating OpEx should of course get offset. But then kind of a one-time extra expense around nine months as well as now why the cost-to-income for Q3 is not headed towards where we would have thought of?
Srikrishnan Hari Hara Sarma
So Priyan, great question. Just to kind of ensure that there is clarity on this. While our total, you know, let’s say, cost-to-income for the nine-month period is 56.93%. If you adjust it for a couple of items. One is that we had the recovery from, you know, written-off accounts which is lesser than if we take into account some one-times which are there, which is super annuation that we kind of created, etc. If I take that all-out, actually speaking, the adjusted cost-to-income for the nine-month period is actually 54.48%. So this is something which we cannot say because these are all one times which we have incurred already. So to answer your question, there is a clear 245 bps as far as the cost-to-income, which is reflected in the books, which is due to this one-time efforts that have happened. The second CFO. Yeah. So we will also get Soham and CFO to give you the breakup of this. But to answer your question that the adjusted cost-to-income would be 54.48%.
Priyank Chheda
Got it. And just a last question on the recovery side as well as on the upgrades that are other than the normal upgrades. We have seen that trend decelerating at least on the upgrade side and even on the technical write-off book, I don’t know if we have disclosed somewhere on this, what is the outstanding book right now as on as on December end. And even on this, as a strategy, we had laid down certain — we had doubled down on this to recover this book with us with a dedicated team somehow we — over the last nine months, we have just recovered INR100 crores versus our thought of earlier recovering around INR200 crores. So on the right — on the recovery as well as on the upgrades.
Srikrishnan Hari Hara Sarma
No, I think there are two-parts to this, recovery from technical write-off account and the general recovery. The general recoveries, we have actually done very well because the total recovery quarter-on-quarter has been much in excess of the number that you’re talking about. So the total recoveries for the quarter itself was INR101 crores. And for the entire nine-month period was INR382 crores. Now as far as technical write-off book is concerned, the total book is about INR3,250 crores on the pool. And yes, the recovery from technical write-off has been lower than the previous quarters and there were some accounts which the bank was targeting, which could not fructify within the same quarter and that will come in this following quarter. That is one. The second is that actually speaking, there are some effort the bank is taking on this 100% provided for technical write-out book where we are working with some asset recovery in our agency and trying to look at some tools which can be given away. The second is that the bank is also looking at — and we have already appointed some collection agent because recoveries from the technical write-out book and from the regular NPA book of lesser than INR1 crore, et-cetera, the bank did not have the administrative missionary to do so. So we have actually appointed collection agencies for doing this as well. While all of this have collaterals in the sense that we do have the security backing up even if it is a smaller law, but the administrative process to do that is something that the bank did not do. So the focus earlier was only for the larger ticket prices. And now we have started doing this for the entire pool through this two, three measures, which is working with asset recovery companies, taking this with collection agents and creating a collection mechanism for the granular less than INR1 crore exposures as well.
Priyank Chheda
So anything — any number that you would like to call? Just a clarification on this, just a clarification. Now any number that you would like to call-out that for FY ’25 last quarter or maybe for FY ’26,
Srikrishnan Hari Hara Sarma
We’ll get back to you separately on this,.
Priyank Chheda
Thank you.
Srikrishnan Hari Hara Sarma
All right. Thank you so much,. Thank you for your support.
Operator
Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your question to two at a time. You may join back the queue for follow-up questions. Next question is from the line of Manik Bansal from Master Capital Services. Please go-ahead.
Srikrishnan Hari Hara Sarma
Good evening,.
Manik Bansal
Good evening, sir. Am I audible?
Srikrishnan Hari Hara Sarma
Yes, very much.
Manik Bansal
So my question is as the bank has improved a lot on the quality aspect as we can see from the improvement in slippages and credit costs, right? So now what are the things the bank is going to focus so as to improve the NIMs and profitability further?
Srikrishnan Hari Hara Sarma
Yeah. So Manaj, I think we already said this earlier very clearly that the bank’s growth in advances will come from the retail and the agri and the mid-market segment and also the retail — MSME segment as well. So as a result, between the mid-corporate book and the retail RAM segment, which there will be a growth and there will be better yields. So that is strategy number-one. The second is that we are building the CASA book. So there is a sales team over 100 people who are focusing only on CASA outbound sales teams and they’re all staff. And the second part is that we do have the retail term deposit where the cross-sell and account opening, etc. So there is a full-fledged drive as far as new accounts being opened and also to get the upsell and the cross-sell once you know the accounts are with the branch with irrespect of where the sourcing happens, whether it is through the branch or whether through the sales teams, the branch takes charge of the relationship and then starts doing it. So what we are trying to do is that we are essentially looking at playing out these two strategies as far as the growth numbers is concerned. And there is also something which we are trying to do is to release some bandwidth as far as our branches are concerned. So there is a decluttering that we are trying to do to release bandwidth. The other is the national back-office, which is a centralization that we have done. And whereby we have removed a lot of activities. We have already centralized clearing, treasury operations, account opening, ATM and direct channels, et-cetera. So all of this is in our national back-office, which we have set-up in an exclusive building in the Mangalore.
Manik Bansal
Okay. So one more question is on deposit side. So as we can see, there is a sequential growth of only 15 basis-points. But if you see some big banks like LDFC Bank, ICIC Bank, they are able to garner some deposits. So what could be the possible reason that they are able to grow their deposit book and bank like ours is struggling to attract?
Srikrishnan Hari Hara Sarma
I would not — because we are struggling, Manik. All that we are saying is that we have a very conscious strategy as far as deposit is concerned because the bank has had a mix in the deposit, which had almost like 12% to 12% plus on bulk, which was at higher rates. Over a period of time in the last two to 3/4, we have reduced that. We have not been bidding. We have actually been growing granular as far as our retail deposits are concerned. While we are accruing, you know, the accretion is higher on retail, but because of the bulk deposit going out-of-the bank, the overall number remains the same, but the mix is changing and that is reflected very clearly in the metrics that I just mentioned in the earlier commentary. So we would start you know, know see this number grow as we go-forward to remain very much in target with the market of about currently this year, the total projection as far as the banking system is concerned on deposit is about 9% to 10%. I think we will very well be in target to do that 8% to 10% of growth as far as the overall deposit is concerned from the INR92,000 crores to the number that we are talking about.
Manik Bansal
Okay. Just last question. What is the percentage of books book fixed and floating?
Srikrishnan Hari Hara Sarma
Thank you. So the — you know, our EBLR base book is about 50% of our overall portfolio. And the fixed-rate would be about, let’s say, the MCLR would be about 15% to 16% and the balance would be more or less in the corporate deposit, which will be at the fixed-rate.
Manik Bansal
Okay. Thank you. Thank you.
Srikrishnan Hari Hara Sarma
Thank you so much. So much,.
Operator
Thank you. Next question is from the line of Rishikesh from RoboCapital. Please go-ahead.
Rishikesh Oza
Hi, sir. Thank you for the opportunity. Am I audible?
Srikrishnan Hari Hara Sarma
Yes, very much, sirish. Please go-ahead thanks.
Rishikesh Oza
So that just dropped year-on-year and quote-on-quarter.
Operator
Your audio is not clear, please not at all this year
Srikrishnan Hari Hara Sarma
Your audio is not clear.
Operator
Rishikesh. We’ll check his connection. Meanwhile, we’ll move on to the next question from the line of Yash Dedia from Maximal Capital. Please go-ahead.
Srikrishnan Hari Hara Sarma
Hi, Yash. Yeah.
Yash Dedia
Yeah. Sir, if I look at your performance in the last one year, I think — and we have been tracking all the peer banks also. So we understand the industry-wide issues. But I think your performance amongst all peers in terms of the yield of an advances drop or cost of deposit increase is probably the worst. And this is despite around 1,000 basis-point additional cost-to-income that we have taken, right? And sir, that was supposed to help us on these parameters, bring better advances at better yields and lower down our cost of deposit by getting us lower-cost of deposit CASA, etc. So it seems that the execution on-the-ground is just not working, sir. So what is the problem right now? And I’m not talking about your bank performance. If I just compare it across all the mid-sized private sector bank, why is your performance so bad compared to all the other banks?
Srikrishnan Hari Hara Sarma
Okay. So Yash, just to kind of put things in perspective, you should not have this isolated view as far as Karnataka Bank is concerned for the past one year because you need to look at the historical part. Prior to 2023, the bank overall deposit growth as well as advances growth was all at single-digit. Now that is something because of the transformative steps that the bank has taken, including management leadership changes at multiple levels and also making sure that the existing management integrated with the bank, the investments that the bank has made into technology for those transformative steps. Now it could be a particular situation where multiple other banks that you are looking at would have taken these steps many, many years ago. So that is not something which we can go back into history. Now we have started this journey, which is a revived journey from 2023 onwards. And as a result, the 2023, ’24, our gross advances grew at closer to 19% and then the deposit grew almost closer to 13%. That is of course higher than the market. And this year, we are stabilizing and we are actually growing the gross advances by about closer to 13%. And then we are also looking at growing the deposit book closer to 10%. Now this is the way that this bank is playing it up. For the results on all the metrics to go through, including the quality, because the bank has inherited a quality issue also related to restructured book and a lot related to the GNPA, which was as high as 3.8% in the past. So all of those things, if you really look-through, the improved parameters will happen gradually, which the trajectory has started happening, the numbers are really showing up and it is also a fact that it takes time to do this. So this transformative journey, if it has taken for multiple other banks seven to 10 years, probably we will take lesser than 50% of the time. So that is the way that we should look at from a positive aspect as far as Karnataka bank is.
Yash Dedia
Sir, but on quarter-to-quarter basis, all these things are worsening rather than improving. That is my main concern. I agree that you might have inherited something which was very bad. But on every quarter, your yields on advances are decreasing your cost of deposits and it is decreasing more than the peers. That is my main major concern. I’m not even talking about what we are.
Srikrishnan Hari Hara Sarma
So again, yes, I’m just reiterating this that you will have to look at it not on a quarter-on-quarter basis or you know something which is a specific parameter to parameter basis. You will have to look at this on a longer-term basis and also the strategies that we are adopting in order to kind of get there. And this has to be on a longer-term basis and you will have to kind of look at it in a term whereby it — the strategies have to start playing out because this is a 100-year-old bank and we are going to celebrate our 100 and first year in the next about 15 to 18 days. And so this is something where a lot of relationships which are there for three to four generations, the customers are banking with us. But then the technology investment that we have made is in the last about 18 to 24 months and also the fact that our digital footprint, our branch sales network, we did not have an outbound sales team as many banks that you’re talking about may have had in the past. All of this have got set-up in the last about 12 to 18 months. So for all of this to start playing out, we need to incur some immediate costs, which is what we have done. Second is, we needed some capital also, which also we have done. So the headroom for making this happen in terms of the growth is something as a prerequisite, which we have done, which is the capital, the headroom on operational and technology capacity, everything related to the people and also the process product transformation, which we are going through. And all of this will start yielding results in the following quarters, upcoming quarters.
Yash Dedia
Okay. And on the NIM, sir, hello?
Srikrishnan Hari Hara Sarma
I think I’ve already answered the NIM during the earlier.
Yash Dedia
The earlier guidance was 3.4 to 3.6% and now we have fallen to 3%. So what is the guidance going-forward?
Srikrishnan Hari Hara Sarma
So 3.3%
Yash Dedia
For the quarter is 3.02. So what is the guidance going-forward?
Srikrishnan Hari Hara Sarma
Quarter is okay. Nine months — quarter we have had pressures, which I already mentioned to you. So you’ll have to look at it as a Nine-Month NIM. Nine-Month NIM is at 3.31% and also the fact that there is an adjustment because of the P&L charges, which also I have explained to you. And last but not the least, you know, we have already given that in the investor presentation in terms of the overall NIM target, which would be 3.2 to 3.4%. That is the target for the guidance. Okay. All right. Thank you, Ash.
Operator
Thank you. We’ll take our next question from the line of Subhan Shirati from Anand Rathi. Please go-ahead.
Srikrishnan Hari Hara Sarma
Hi, good evening.
Subhan Shirati
Good evening, sir. My first question would be what is the proportion of gold loans in the overall loan portfolio and what is the percentage of agriculture loan book comprises gold loans?
Srikrishnan Hari Hara Sarma
So we would be about 10% of the overall book. Approximately I’m giving you that on a book size of about INR77,500 crores, we will be closer to about INR8,000 odd crores, so INR7,000 plus INR7,000 crores INR8,000 crores. So that would be about 10% approximately. That is on the gold book. The breakup of agri and non-agri within the gold book? Let me just pull it out and we’ll send it to you.
Subhan Shirati
Okay. And the next question would be with respect to the RBI regulations, any discussions that has been held with the regulators regarding gold loans, particularly the LTV norms and the loan rollovers, etc?
Srikrishnan Hari Hara Sarma
Okay. Once again, I’ll read-out the agri and non-agri part also. The gold loan agri is INR6,450 crores and the non-agri is INR1,260 crores. So that is the number. And you are talking about the regulatory part related to LPV. So all of the guidelines that are to be followed, we are in 100% compliance as far as the gold loan book is concerned.
Subhan Shirati
Regarding LTV.
Operator
I’m sorry, Subanshy, you are not clear. Can you use your handset? Please?
Subhan Shirati
Yeah, sure. Madla, I am asking about any discussions held with the regulators regarding gold loans, LTV loans and loans.
Srikrishnan Hari Hara Sarma
No, this is — there is no any special discussion that we’ve had with the regulator on this. Normal whatever is there as part of the normal inspection and audit,, is something that happens on an annual basis.
Subhan Shirati
Okay. Thank you, sir.
Operator
Thank you.
Srikrishnan Hari Hara Sarma
Thank you so much.
Operator
We’ll take our next question from the line of Ameya Chheda from Banyan Capital. Please go-ahead.
Ameya Chheda
Thanks for the opportunity. Sir, can we say that the cost of funds are peaked out now? The reason I’m asking you is that in your TV interview on December 12, right, you had mentioned that the cost of funds have peaked out and we have again seen a sequential increase in the cost of funds?
Srikrishnan Hari Hara Sarma
Yeah. So I would — I would think so. But of course, the market, while we are not aggressive on the overall deposit numbers in terms of the interest-rate that we offer even on the retail. There are banks which are offering 8% on retail deposits, term deposits, which we are still at about 7.5%. So that way we’re still maintaining. But I think the whole market scenario has to be looked into, which is the rate cut that is widely anticipated and also the fact that the overall impact as far as the bank is concerned. And the last part is that we have to actually neutralize this by increasing CASA. Now the whole market is facing this CASA issue, but we are reasonably alright, I would say that compared to many others, we are still — while the market has come down by 4%, as I said in the earlier commentary, we have come down by hardly 1.1% or 1.2% as far as the CASA is concerned. So we are actually gaining traction there and which is why we have deployed new products. We have deployed sales teams and deployed renewed focus as far as the branches are concerned on CASA.
Ameya Chheda
Sir, on this NIM guidance of 3.2%, 3.4%, when do you think we can achieve that?
Srikrishnan Hari Hara Sarma
We will start seeing that we are already on a Nine-Month basis, we are at the 3.31% as I mentioned to you, which is basically, you know, we will continue this and we’ll start seeing an improvement in the NIM as I called out earlier, which is a 10 to 12 bps and the real churn on the overall advances will happen, which will be in FY ’26.
Ameya Chheda
Okay. And sir, what is your guidance ROA and ROE guidance for FY ’23?
Srikrishnan Hari Hara Sarma
Yeah, 1.1 to 1.2 is as far as ROA is concerned. And on the ROE, you know, we would want to kind of be in the 12.5% to 13% as we go into FY ’26.
Ameya Chheda
Okay. And sir, just last one question. On the loan book, right, so loan book growth. So basically two, 3/4 back, we were eyeing a 18% odd CAGR for loan book because you were trying to reach INR1 lakh crores by in the next two years. Now in the Q2 call, it got reduced to to 18. In December, you had mentioned it will be around 13% and now it is again revised to 12. So what is leading to the continuous revised guidance is on the loan book for growth.
Srikrishnan Hari Hara Sarma
So there is nothing. It is not an appetite issue or anything. It is just that we are doing this granular rather than having to do because the real jump last year happened because of the larger, you know, bulky loans that we had done, which we have no stock. We don’t do that again. We have seen a INR750 crores of repayment of some larger NBFC and bulk loans even this quarter. Now having said that, you know, the INR1 lakh crore, we had committed to a INR1 lakh crore of which was in June of ’26, ’23 with a three-year outlook, that is like June of ’26. I think we still stay committed to that. And the current outlook is that at about INR77,500 crores, even if we grow about 4% to 4.5% now, we would easily cross INR80 crore to INR81,000 crores as of this financial year itself. And then building on-top of that, at, let’s say, INR81,500 crores, if you grow about 14% year-on-year. Now the next year will be closer to INR92,000 crores. And then the first-quarter, we will do another about INR4,000 plus crores. So we would be closer to INR1 lakh crore definitely by June ’26, if not crossing INR1 lakh crores.
Ameya Chheda
Okay. So basically, this is the guidance that has been. Just one suggestion from our side, right, because I just suggest that we’d be more careful with our guidance is because there has been a series of, you know the guidance is not being met. So that was my suggestion. Thank you, sir.
Srikrishnan Hari Hara Sarma
Thank you. Thank you. Point notice, sir.
Operator
Thank you. Thank you. We’ll take our next question from the line of Anand Mundra from My Mite Temple Capital Advisors LLP. Please go-ahead.
Anand Mundra
Hello. Yeah. Thank you for the opportunity. Yeah. Sir, I just had one question. Why is there a difference in the net-worth that is reported in the presentation versus what is given in the result.
Srikrishnan Hari Hara Sarma
Net worth.
Anand Mundra
So if I add the capital and reserve in surplus as given on page 13 of the presentation, yeah, versus, I think INR11,320 odd crores, which is given in the result.
Srikrishnan Hari Hara Sarma
Okay, allow us to check this please. Once again, CFO is wanting to say something. No, we’ll have to check. Sir, we will get back to you. Do we can we just look at — I know we will look at getting you the response on this, please.
Anand Mundra
Okay, okay, sir. It.
Srikrishnan Hari Hara Sarma
Maybe it is a revaluation reserve. That’s what they are saying. It is a revaluation reserve is what the team is confirming to make. Is that INR519 crores?
Anand Mundra
Got it, got it. So that is okay.
Srikrishnan Hari Hara Sarma
Yeah. All right. Thank you.
Anand Mundra
Thank you.
Operator
Thank you. We’ll take our next question from the line of Anand Dhama from Emkay Global. Please go-ahead.
Srikrishnan Hari Hara Sarma
Good evening, Anand.
Anand Dhama
Yeah, good evening, sir. So my first question is primarily on our margins that we have seen the dip during the current quarter, I think you already guided for the full-year. The interest stuff is largely behind now on a quarter-on-quarter basis, if I have to look at it or there could be more impact because of that, number-one. Number two is that ideally, I think in the 4th-quarter, we tend to see higher NPA formation. So 3rd-quarter versus second-quarter was higher and 4th-quarter ideally should be higher as basically lot of restructured loans slipping to NPA. In that case, there could be some more pressure on margins that you might see in the 4th-quarter. That’s how to do.
Operator
I’m sorry, Anand, can you use your handset more line is not very clear.
Anand Dhama
Do I have to repeat the question,
Srikrishnan Hari Hara Sarma
What you wanted to know. Just kind of to confirm one is that our, overall the mix of the loans and the fact that we are looking at the yield to increase by-10 to 12 bps as far as NIM is concerned, that is something which we are well on-track. So that is the question number-one that you had asked. And I do not see that as an issue going-forward. So I don’t think that we are in any way revising that or saying that we will not be able to achieve. That’s one. The second part is that as far as you know, the second part which is related to the margins, right? Now the 4th-quarter. The 4th-quarter is something that is always good for Karnataka Bank. And one is that there are some charges and recoveries that is the other income part which comes in. The second is that quarter-four has been always the best-performing quarter for us on advances as well as deposit because of our nature of our customers, because of some contractor segment, agri segment and so on, so forth. So both sides of the balance sheet are positively impacted as far as the bank is concerned. And we believe that we would actually be able to achieve what we wanted to do for the entire financial year. So from that perspective, overall, we are still bullish on that.
Anand Dhama
So I think my question was that typically you were saying you’re guiding that basically restructured book will continue to come down and that basically to some extent would flow into the NPAs. So we — what I — my question was basically the P&L interest plus higher interest on NPAs could keep the pressure on the margins in the near-term intact though obviously there are other things like portfolio mix and all will help you, but in the near-term, should we see the margins contracting?
Srikrishnan Hari Hara Sarma
So I do not think so. The reason being that on a nine-month period also, we have not like really come down drastically. One, secondly, this margin improvement and the restructured assets actually has come down now compared to the earlier time. So the number is actually on a standalone basis restructured, it’s only about INR900 crores. And the INR900 crores also, we would be — I mean, they’re all currently across all the moratorium period and now either they have to standardize or we will have to recover through the collateral — they are all collateral back. So I do not see that we would have any slippages from those. And the second part is that because of that, I do not see any margin-related issues as far as the restructured assets are concerned, because we are kind of managing these two on two independent trucks.
Anand Dhama
Sir, any guidance in terms of PCI that we want to be there by year-end and maybe next year and what’s our current LCR?
Srikrishnan Hari Hara Sarma
So our current LCR that I — no, first is the PCR. So the PCR with the technical write-off CWO is in excess of 80% and 56. I think 1.5%, 56.06% is our excluding the technical write-off. On a quarter-on-quarter basis, we are committed to kind of improving PCR by 1% every quarter, at least a minimum of 1%. And as far as LCR is concerned, we were at 150% if I have to look at the number. So I do not see that as any pressure because we are quite comfortable there.
Anand Dhama
Sure. And sir, lastly, I think if the retail banking head is also there on the call, if you can basically spell out the retail strategy that you would be now looking at now that basically you have assessed things that are the on-ground changes which have happened in terms of what kind of loan portfolio that you want to target, basically, we would want to hear from him.
Srikrishnan Hari Hara Sarma
And maybe you can supplement. Srin not on the call, but I would request Shekhar to just our Executive Director because he manages that business also. So he will be in a better position to just let you know very quickly.
Sekhar Rao
Yeah. So clearly, I think with what we have stated earlier, the focus is on growing the RAM segment. We’ve already seen green shoots in that. If you see the current year book, a significant part of our growth has come from — out-of-the total growth of around INR4,863, retail has grown by INR3 crores to INR61 crores. So that the majority of growth in — has come from retail. Here the strategy is to focus on Tier-2 for retail. We want to be a large equivalent of the large bank for tide — for Tier-2 locations because Tier-1 is already a taken space and the yields also not very competitive there. And we have a significant FI presence, agri and FI branches are there. The strategy of the bank was what you call two setup branches in clusters in Karnata in this agri and FI pockets. So we will — we have deployed AFOs in these branches and we’ll see traction there. We’ve also set-up retail asset centers and the first two have gone live. This is to improve ease of processing, improve turnaround time and the efficiency metrics. So we inaugurated the Mangalore RFC yesterday, which is our second retail asset center. We plan to open five more. With that for retail loan processing, we will have done centralized location, 10 RLPSEs and I mean five RLPSEs and five RACs. So that’s the strategy. Apart from that, we are putting in-place a significant connector model feet on-street that MD and CEO spoke about, improving the product mix. We have undertaken a major credit transformation exercise through a well-known consulting firm. And through this, we have revamped the way we underwrite the credit policies for all our headline products. A combination of this, we are quite confident will yield results in the retail asset book.
Anand Dhama
But sir, this is a strategy that we have heard last quarter as well. What we are talking about here is the product — any development which have happened like on the vehicle financing, new tie-ups that you’ve done or you are taking up ahead in terms of lending more from branches, non-branches and so on. Yeah, if you can talk about the product by strategy, that will help a lot.
Sekhar Rao
Yeah. So there are two or three products that we have launched. In fact, the commercial vehicle is one where we have launched the products and that has taken out very well. We’ve launched a focus product for the student segment in combination with the liability product, KBLP and KBL Genius. This is comparable to any — and it’s actually a kind of best-in-class product. And we are there trying up with education consultant colleges because we have good presence in the market in that space and the response there as well has been good. As we speak, we have received approval from Maruti for a tie-up for their EV space. So specifically. So that’s LCV. Yeah. Then we have tie-up with the likes of JCB and also for the dealer tiles for LCVs. In fact a large part of number of Karnata automobile dealers have been funded by us for their overdraft space. There we are extending inventory financing also so that our presence in the auto loan segment will improve. On the liability side also, we are coming up with women account, account the family account and the bundled wealth management proposition where we are in the advanced stages of implementing a wealth management platform
Srikrishnan Hari Hara Sarma
Hope you got the details of that?
Anand Dhama
Sure, sir. Thanks a lot.
Srikrishnan Hari Hara Sarma
Thank you.
Operator
Thank you. We’ll take our next question from the line of Saket Kapoor from Kapoor Company. Please go-ahead.
Srikrishnan Hari Hara Sarma
Hi, Saket.
Saket Kapoor
Yeah, Namas Kar, sir yeah, thank you for this opportunity,, sir., to sum it up, sir, although you have very elaborately explained us and given your views and thoughts on the way ahead. But taking into account the factors that are influencing the banking industry currently. And when we look at our interest expended part, that is not lying incomensurate to the increase in interest income. So firstly, sir, going ahead for a year as a whole, since you are only — since you have articled to look at the nine months, how confident are we to match our operating profit for the year ending 31st March 2025 when on a comparable basis to 2024.
Srikrishnan Hari Hara Sarma
So 2024, we had closed it out with INR1032 crores, just — sorry, INR1306 crores. Correct, sir. The Nine-Month period, we had 1032. So the last quarter, if you look at the current, we are at 1021 compared to 1032. So we are like hardly any difference because hardly some IN 10 crores INR11 crores difference there. So the last quarter is always the best quarter for the bank in the past. So I think we are well-positioned to surpass the previous year number. And also the fact that you need to take into account that compared to the last year, the treasury income, which is on account of the AFS book is not allowed to be taken into P&L by any bank as per regulations effective April 1, ’24. And on a nine-month period, that number itself is about INR100 crores. And on a 12-month period, the number could be anywhere between INR1150 crores to INR120 crores. So if you really look-through that if we surpass that INR1,306 crores as of last year without having to take the treasury number, then we would be well in excess of that and that’s I think very, very clearly visible from our perspective.
Saket Kapoor
Okay. And when we look at also as interest on balances with RBI, that has gone up — that income has gone up significantly. That has been doubled from a base of INR17 crore to INR37 crores. And last year the balance was only INR18 crores. So how is this going to plan out? And if there are rate cuts that are envisaged, how will this line-item going to get affected?
Srikrishnan Hari Hara Sarma
So basically, we are comfortable on liquidity. We have been lending in the market on a continuous basis at least in excess of INR200 crores INR3,000 crores per day. And this is why the interest which is there based on various forms of lending, which involves RBI and that is how the interest income has gone up. So basically, there is part of our treasury money market operations.
Saket Kapoor
Okay. So what we investors would like to only get some understanding from the management people is that in the current scenario where deposits — deposits are becoming scared and also costly, cost of deposit is going up and inching up higher, how confident are the mid-sized banks like KTK that they can look-forward to grow profitably the with the trajectories as explained earlier. So since you have raised capital twice in the form of QIP and also used it very effectively in lowering the high-cost loans, but still the price at which the QIP were done, the current market cap and the enterprise value are significantly down — are significantly lower than what it was. So what should investors take-home, sir? Especially in this current scenario of investing in the mid-sized banks like KTK, which are in the transformative journeys.
Srikrishnan Hari Hara Sarma
I agree with you. I will only talk about the journey that we do and the market price is an outcome of that and this is not something that I would like to really comment on what the outlook as far as the price would be. But having said that, you need to look at strong multiples based on the position of the bank. So we are growing the business turnover of the bank as of 2023, ’24 was at INR1,45,000 crores. Now we are about INR177,000 or INR178,000 crores. Obviously, the top-line growth is there. The second part is that there are various metrics where the bank in the past had certain strategies adopted and which we are churning around both on the liability as well as on the asset front. So those will yield results as far as profitability is concerned, and that’s something that I answered to you earlier. Third is that based on this trend, the market has to decide the multiples and comparable with other similar peer banks or with other banks. So this is the way that it works. So I’d really not want to kind of look at an outlook as far as the price is concerned. But having said that, if we are strong on the fundamentals and the growth path and the execution strategy, I think the market will reward us.
Saket Kapoor
Okay. Thank you, sir. And all the best for answering all the questions very elaborately and giving opportunity to everybody, sir. And we hope for the continuity of the same sir.
Srikrishnan Hari Hara Sarma
Thank you so much, sir. Thank you for your best wish.
Operator
Thank you.
Srikrishnan Hari Hara Sarma
All right.
Operator
Ladies and gentlemen, yes, that was the last question. So over to you for closing comments.
Srikrishnan Hari Hara Sarma
Thank you. I would like to thank the support and the interest in participation today as well as in various other investor conferences as part of our overall engagement with investors is concerned. On behalf of the management team who is present here and on behalf of the entire Bank workforce. I would like to thank you all and we hope that we will be able to stand-up to our expectations in the following quarters and coming up quarters. Thank you so much.
Operator
Thank you, sir. On behalf of Karnataka Bank, that concludes this conference. Thank you for joining us and you may now disconnect your lines.
Srikrishnan Hari Hara Sarma
Thank you, as.
Sekhar Rao
Thank you.
Operator
My pleasure, sir. Good night.