Karnataka Bank scrips today hit the 52-week high of Rs 121.80, freezing at the 20 per cent upper circuit filter of 20 per cent on the Bombay Stock Exchange (BSE) with 4.79 lakh shares changing hands.
As per market sources, there is a buzz about a complete buyout of KBL. However, the private sector bank has not made any comment in this regard. Analysts say that there is a possibility of a complete buyout of the bank as its equity is quite low and strategic investors would not like to settle for any minor stake in the bank. There are also rumours that KBL may decide on equity placement with some foreign institutional investors or a merger with a foreign bank.
In the last 31 sessions, KBL rose 64 per cent to Rs 101.50 on March 13 from Rs 61.85 on January 29. In the same period, volumes witnessed a substantial rise (a high of 3.15 lakh share on March 6 and a low of 2,470 share on January 30).
However, despite strong business growth over the years, the bank's net profit over the last four years has declined from Rs 58.16 crore (1998) to Rs 45.41 crore (2001). Analysts said that this may be attributed to low net interest income growth (signaling pressure on net interest margins) and also higher provisions.
During the first nine months of FY 2002, net profit of the bank doubled to Rs 75.32 crore from Rs 35.4 crore in the same period last year. The rise in net profit was despite a decline in net interest income by 20.72 per cent to Rs 89.67 crore and increase in provisions from Rs 43.41 crore to Rs 98.86 crore. The decline in interest income reflects pressure on interest margins. However, net profit doubled due to a quantum jump in other income from Rs 44.72 crore to Rs 181.09 crore.
The Karnataka Bank was incorporated in February 1924. It was promoted by B R Vyasarayachar and other leading members. But, at present, the bank is professionally managed and has no identifiable promoters. Another venture of KBL is Bharat Overseas Bank which was co-promoted along with six other banks.
KBL has a total network of 354 branches (March 2001) spread over 14 states and 2 union territories besides having 3 service branches and 10 extension counters and a total staff strength of 4,084 employees (March 2001).
