Karnataka Bank Ltd. · NSE:KTKBANK
Karnataka Bank — Investor Presentation (February 2020)
35 slides from Karnataka Bank's investor presentation, February 2020
Slide 1: Investor Presentation Feb 2020
Investor Presentation Feb 2020
Slide 2: Agenda
Agenda Bank Overview Financial Strength of KBL Business Strategy & Transformation 1
Slide 3: Bank Overview
Bank Overview 2
Slide 4: We are a time tested bank with 95-year history
We are a time tested bank with 95-year history Reach & product offering expansion Present Rs 1.26 Business Day Trillion Turnover 2010s Took over 3 2000 Rs 61 regional banks Net Worth Billion+ Incorporated 1995 in Mangalore Pioneer in adopting 10 Customer 1960s Core Banking Million+ Base Solution (CB
Slide 5: Nation-wide presence with ~2400 branches and ATMs
Nation-wide presence with ~2400 branches and ATMs Pan-India presence of 840+ branches 23 7 5 2 9 1 • Total 2336 services outlets of branches, ATMs, recyclers 11 9 1 2 • Specialized branches for 3 20 Forex, Industrial, Agriculture, MSME, Corporate business 7 11 4 & Financial Inclusion 8 51 25 • 121 F
Slide 6: We have a proven track record of profitable growth
We have a proven track record of profitable growth Profit After Tax (Rs. Cr) FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 Q1-Q3 311 451 415 452 326 477 404 • Profitable in all years since inception • Consistent dividend track record in 93 of 95 years 5
Slide 7: Strong risk framework practised in the bank
Strong risk framework practised in the bank Enterprise level fraud NPA of 4.41% in FY19 management system amongst lowest vs Industry instituted average of 9.1% Scientific tools such as Effective ALM set Fund Transfer Pricing to up to monitor risks assess performance Operational risk Robust pra
Slide 8: 67% of shareholding is retail
67% of shareholding is retail Shareholding as on Dec 31, 2019 Top 3 shareholders 7.8% 11.0% 13.5% 67.7% B Sumanthkumar Reddy and relatives Indian Public FPIs Banks, FIs, MFs, Insurance Cos Others 4.97% 4.39% 3.97% Total Shareholders 1,94,279 % holding 7
Slide 9: 8,200+ strong employee force driving bank
8,200+ strong employee force driving bank 223 8,240 Total Staff Executives 37 Average Age years 3,326 4,691 Note: All figures as on Dec 31, 2019 Officers Award Staffs 8
Slide 10: Professionally managed bank with experienced board
Professionally managed bank with experienced board P Jayarama Bhat Mahabaleshwara M S Non Executive Chairman Managing Director & CEO Ashok Haranahalli, Rammohan Rao Belle, U R Bhat, Bengaluru Bengaluru Mumbai Former Advocate Former MD & CEO, Investment Advisor & General, Govt. of SBI General Insuran
Slide 11: Bank recognized at various forums over the last year
Bank recognized at various forums over the last year ET Business Excellence Atal Pension Yojana ET NOW – Employee Engagement Award, 2019 “GAME CHANGERS" Leadership Award, 2019 Award, 2019 Select awards received this year … and many more 10
Slide 12: Financial Strength of KBL
Financial Strength of KBL 11
Slide 13: Snapshot of key financial metrics [I/II]
Snapshot of key financial metrics [I/II] Key Metrics FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 (Q1-Q3) Turnover (Rs Cr) 77,689 84,391 93,649 1,10,123 1,23,280 1,26,267 Operating Profit (Rs Cr) 773 855 996 1,473 1,450 1,265 Net Profit (Rs Cr) 451 415 452 326 477 404 RoA 0.91% 0.76%
Slide 14: Snapshot of key financial metrics [II/II]
Snapshot of key financial metrics [II/II] Key Metrics FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 (Q1-Q3) CASA Ratio (%) 24.94% 26.26% 29.04% 27.99% 28.06% 27.39% CD Ratio (%) 68.9% 67.2% 65.1% 75.2% 80.1% 76.95% Business/employee (Rs Cr) 10.5 10.8 11.7 13.5 14.9 15.3 Business/branch (
Slide 15: Both advances and deposits have shown healthy growth
Both advances and deposits have shown healthy growth Total Advances (Rs Cr) Total Deposits (Rs Cr) +15% +8% 51,961 54,911 35,786 44,354 57,771 65,141 71,356 57,435 14.9% 0.3% 1.0% 2.0% 0.1% 25.5% 29.4% 25.2% 32.7% 27.7% 28.3% 27.0% 69.5% 70.8% 72.5% 71.4% 52.4% 46.9% 46.6% 43.7% 30.2% 28.2
Slide 16: External rating wise Credit Portfolio as of Dec '19
External rating wise Credit Portfolio as of Dec ‘19 [ Figures in brackets – as of Dec ‘18] Of which, No. of No of Balance O/s NPA – Bal SMA2 – Bal Rating % to GBC NPA – no. of o/s (cr) SMA2 o/s (cr) Borrowers (in cr) borrowers borrowers 19 5,981 10.74 AAA - - - - (22) (7,281) (13.80) 34 4,631 8.32 A
Slide 17: Business Strategy & Transformation
Business Strategy & Transformation 16
Slide 18: 'Vikaas' transformation initiated to realize this ambition
'Vikaas' transformation initiated to realize this ambition • Journey started in December 2017 in partnership with Boston Consulting Group Vikaas Mission Statement To our investors, we To our customers, we will will be a To our employees, we use digital and analytics diversified, sales- will be th
Slide 19: 5 point transformation agenda for Vikaas
5 point transformation agenda for Vikaas Digital & IT 3 Customer Profitability Experience & Risk 2 4 Improvement Sales & HR & Ways of Marketing 1 5 Working 18
Slide 20: Vikaas Phase 1 modernizing core of KBL: sales & marketing
Paradigm shift in sales & marketing culture in the bank • Sales culture embedded with 300+ sales team onboarded, another 200 to join by FY end • Launched new products (salary SB, TASC) & new channels (DSAs, bureau, contact center) • Home loan book growing at 32%+ vs. 16% pre-Vikaas; MSME to follow V
Slide 21: Vikaas Phase 1: customer experience, risk and digital
Transformation of customer experience & risk management • 14 RLPCs launched, sanctioning process streamlined - TAT for MSME & Home loans sanctions reduced by 70% (e.g. from 30 days to 7 days to HL) • Regional collection hubs rolled out for all regions after successful pilot in Bangalore • Digital NP
Slide 22: Vikaas Phase 1: advances profitability, HR and ways of working
Concrete measures rolled out to improve advances profitability • Personal Loan launched under DCoE – 14% avg yield in sanctions till date • Risk-based pricing rolled out for Auto – has delivered 10 bps improvement since launch • MLLS attachment increased by 3x to enhance HL profitability • Processin
Slide 23: Vikaas initiatives have started yielding results
Vikaas initiatives have started yielding results FY18, pre-Vikaas FY19, during Vikaas Return on Assets 0.5% 0.6% Return on Equity 6.2% 8.5% Gross NPA 4.9% 4.4% Retail Advances Growth 9% 10% PAT Growth (y-o-y) -25% 47% 22
Slide 24: Select Success Stories
Select Success Stories 23
Slide 25: State of the art DCoE launched
Cross Functional Bank Team setup at DCoE … State of the art Function # Bank Staff DCoE launched Credit 10 35+ Bank staff part of DCoE IT Infrastructure 5 IT Applications 5 Data & MIS 9 Others 5 … co-developing solutions with 6 on-site vendor partners Capability # Vendor Resources Application Develop
Slide 26: 'Xpress' line of digital products launched [I/II]
'Xpress' line of digital products launched [I/II] Bank embracing best-in-class digital credit assessment methodologies to transform customer experience, reduce opex, enhance yields Xpress Home Loan Xpress Cash Loan Xpress Car Loan Assisted journey Self-service journey Assisted journey On-the-spot sa
Slide 27: 'Xpress' line of digital products launched [I/II]
'Xpress' line of digital products launched [I/II] Xpress Savings Xpress Working Capital Xpress Term Loan Account Loan for MSMEs for MSMEs Assisted journey Assisted journey Assisted journey Account opened in In-principle sanction In-principle sanction within <15 mins within 1-2 days 1-2 days Launched
Slide 28: Customer experience has been transformed using digital
Customer experience has been transformed using digital Significant Reduction in Turnaround Time … coupled with multiple initiatives to (TAT)… increase customer satisfaction Minimum customer visits to the branch Home Loan MSME • e.g. Customer visits in HL reduced from 3+ to 1 Pre Vikaas 30+ 45+ days
Slide 29: Digital being embedded in daily ways of working
Digital being embedded in daily ways of working • Lead management • Collections • Objective • NPA management • Daily sales target • Daily tracking of app for end-to- application to performance tool: auto achievement: 40+ branch huddle end tracking of track collection management: triggers, real time
Slide 30: Digi-branch launched for instant SB account opening
Digi-branch launched for instant SB account opening Launched in Nov-18 • 2.5k accounts opened since launch • Rs 5 crs of funds mobilized • 11 accounts opened on avg per day vs 4 by branches • Account opened and debit card printed within 20 minutes • Bangalore branches to utilize this going forward 2
Slide 31: Home loan advances growth has doubled to 32%
Home loan advances growth has doubled to 32% Home Loan Advances (Rs Cr) +32% +26% +17% +15% +17% 9800 7,474 5,944 4,402 5,084 3,767 FY15 FY16 FY17 FY18 FY19 FY20 Proj Similar focus initiated on accelerating growth in other retail portfolio such as car loans, personal loans 30
Slide 32: Commission from third party products to grow 40% this FY
Commission from third party products to grow 40% this FY from 10% historically Business-as-usual commission income growth Annual targets set to meet 50% income 10% till FY19 growth by end of FY TPP commission income, Rs Cr TPP commission income, Rs Cr +9% 40% +10% 30 42 27 25 32 22 30 FY16 FY17
Slide 33: CASA initiatives yielding results
CASA initiatives yielding results Current FY seeing much better balance growth CASA ratio has been increasing over the years Terminal CASA balance, Rs. Cr CASA Ratio (%) +15% 31% +10% +11% +13% 29% 29% 28% 28% +10% 25% 26% +7% +8% +9% Jun Sep Dec Mar Proj. FY15 FY16 FY17 FY18 FY19
Slide 34: Transformation journey will continue to meet bank's ambitious aspirations
Transformation journey will continue to meet bank's ambitious aspirations Increase share of Retail, MSME and Further accelerate CASA growth to take Mid-corp advances: CASA Ratio to 30%+ Segment Mar '19 Jun '19 Sep '19 Dec '19 Target Build systematic cross sell capability to double products per ba
Slide 35: Thank you
Karnataka Bank Ltd.
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