This article first appeared on GuruFocus .
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Total Business:INR227,267 crore, 6% QoQ growth, 16% YoY growth.
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Advances:INR104,680 crore, 6% QoQ growth.
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Deposits:INR122,587 crore, 6% QoQ growth.
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Net Interest Margin (NIM):4.26%, with a one-off item increasing it to 4.34%.
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Operating Profit:INR1,096 crore, 36% YoY increase, 12% sequential decline.
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Net Interest Income:32% YoY growth, 5% sequential growth.
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Non-Interest Income:INR442 crore, 28% sequential decline.
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Net Profit:INR756 crore, 4% QoQ increase, 45% YoY increase.
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Gross NPA:0.74%, marginal decline.
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Net NPA:0.19%, steady.
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CRAR Basel III:18.61%.
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Liquidity Coverage Ratio:123.61%.
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Retail Advances Growth:23% YoY.
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Retail Jewel Loans Growth:12% QoQ.
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Mortgage Loans Growth:9% QoQ.
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CASA Growth:9% over the same period.
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Current Account Portfolio Growth:19% QoQ.
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Savings Account Portfolio Growth:4% QoQ.
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Retail Deposits Growth:6% QoQ.
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Branches Opened:2 new branches in Q1.
Release Date: July 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Karur Vysya Bank Ltd ( BOM:590003 ) reported a strong start to the financial year with a total business reaching INR227,267 crore, reflecting a year-on-year growth of 16%.
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The bank's net interest margin (NIM) was maintained at 4.26%, which is higher than the previous quarter, indicating effective asset mix calibration and yield optimization.
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Retail advances increased by 6% quarter on quarter, driven by growth in jewel loans and mortgage loans, with retail jewel loans registering a 12% growth.
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The bank's CASA (Current Account Savings Account) grew by 9% over the same period, with a significant contribution from new-to-bank customers.
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Karur Vysya Bank Ltd ( BOM:590003 ) maintained a healthy capital adequacy ratio (CRAR) of 18.61%, providing comfortable headroom for growth.
Negative Points
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Non-interest income for the period stood at INR442 crore, down from INR616 crore in the previous quarter, marking a 28% sequential decline.
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Operating profit for the quarter declined by 12% sequentially due to one-off items and higher operating expenses.
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The bank anticipates a reduction of 10 basis points in the yield on advances in the next quarter due to competition and customer retention efforts.
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The cost of deposits increased slightly by 4 basis points on a sequential basis, and further increases are expected in the next quarter.
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The bank's operating expenses for the quarter increased by INR41 crore sequentially, partly due to higher provision requirements for employee benefits.
Q & A Highlights
Q: Can you provide guidance on growth relative to the system level, given the current system growth rate of around 18%? A: B. Ramesh Babu, CEO, stated that the bank aims to grow 1% to 2% above the system level. However, if the system growth is driven by corporate segments, the bank will be cautious to avoid past mistakes of over-reliance on corporate growth.
Q: What is the outlook for SME loan growth, given the recent decline in year-on-year growth rates? A: B. Ramesh Babu, CEO, explained that the previous quarter's flat growth was due to pricing competition and a strategic decision to not grow aggressively. The bank expects to achieve 18% growth in the SME segment this year.
Q: How is the bank approaching the Emergency Credit Line Guarantee Scheme (ECLGS) disbursements? A: B. Sankar, Executive Director, mentioned that the bank is carefully screening applications to ensure eligibility. So far, INR140 crore has been disbursed in the commercial segment, with more applications under review.
Q: What is the blended yield for the gold loan portfolio, and how does it impact profitability? A: B. Ramesh Babu, CEO, indicated that the blended yield for gold loans, including retail and agri, is between 11% to 12%. The agri segment benefits from Priority Sector Lending (PSL) status, which can enhance yields.
Q: How does the bank plan to manage the impact of rising costs on margins? A: B. Ramesh Babu, CEO, acknowledged the challenge of balancing customer retention with yield management. The bank is focusing on maintaining a healthy asset mix and optimizing costs to sustain margins above 4%.
Q: What is the strategy for CASA growth, and is the recent growth sustainable? A: B. Ramesh Babu, CEO, emphasized the bank's focus on maintaining double-digit CASA growth to reduce deposit costs. While some growth was due to end-of-quarter inflows, the bank aims to sustain this momentum.
Q: How does the bank view the impact of the ECL provisioning guidelines on credit costs? A: B. Ramesh Babu, CEO, stated that the bank has maintained adequate provisions and buffers, with total provisions to advances at 1.7%. The transition to ECL is expected to have a limited impact due to the bank's strong asset quality.
Q: What are the expectations for the bank's net interest margin (NIM) for the full year? A: B. Ramesh Babu, CEO, mentioned that while the NIM is currently above 4%, the bank maintains a full-year guidance of 3.7% to 3.8%. The bank will reassess this guidance after the second quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
