Stockrabit · Analysts
Questions across 5 calls

B. Ramesh Babu

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Karur Vysya Bank Limited

Karur Vysya Bank Limited CC-May26.pdf · 2026-05-07
Yes. Thank you, ma'am. Good evening to all of you. First of all, sincere apologies from our side. There is a technical glitch, and we have been trying for the last 10 minutes, and there's a disturbance in the call. That's why we couldn't. So sorry again, once again for all -- to keep all of you waiting. So again, good evening. And on behalf of Karur Vysya Bank, I extend a warm welcome to all the participants joining our earnings call for the fourth quar ter of the financial year 2026. Our financial results and accompanying presentation have been made available on our website, and I trust you have reviewed them thoroughly prior to this call. We are pleased to report that our performance indicators for the financial year '25 -'26 are fully aligned with the guidance provided at the outset of the year. This alignment is a testament to the effectiveness of our strategies and operational discipline. It is particularly encouraging to observe that our performance has consistently surpassed our guidance across 3 key metrics , growth, profitability and asset quality. Our growth trajectory has been robust, reflecting our commitment to expanding business operations and enhancing value for all stakeholders. Profitability has remained strong throughout the year, underscoring our focus on prudent financial management and sustained earnings. Furthermore, asset quality continues to be well maintained, reaffirming our dedication to sound risk practices and inclusive banking. The bank's total business stands at INR 2,14,420 crores as on 31st March 2026 as compared to previous year INR1,86,569 crores, registering a growth of 15%. The advances stand at INR98,754 crores and deposits grew to INR1,15,666 crores with a growth of 17% and 13%, respectively. With respect to business mix of our advances portfolio, RAM Verticals have grown by 18% year -on-year, 2% quarter-on-quarter, constituting 86% of our overall advances portfolio. Retail loan book increased its share to 27%, agri remained at 25% and commercial book at 35%. You may find a moderation in the growth of advances in the last quarter of the year as we took a conscious call in advances growth, considering the geopolitical situations and not to are in place. The primary focus of this team would be to source new relationships. The corporate portfolio achieved a growth of 12% over the past year, which was degrowing up to last year. Strategic opportunities were identified within segments such as commercial real estate, capital markets and EPC contractors, which contributed to this progress despite challenges associated with the prevailing interest rate environment. These sectors supported sustained portfolio expansion while preserving the required spread and remaining consisten t with the bank's risk profile. In response to external conditions, growth was moderated in the final quarter. Including credit substitutes, our corporate advances portfolio posted a 20% year -on-year increase. With respect to credit substitutes, incremental growth during the year was INR969 crores. We had focused ETB customers with an external rating of A and above and were able to offer fin er pricing in credit substitutes compared to the loans. In the meanwhile, the offer, final pricing in the sense we are able to get a better pricing in the credit substitutes than the loans. The Transaction Banking Group plays a key role in the bank's digital transformation agenda by providing API first real -time banking capabilities for corporates and MSME clients, scalable bulk payment infrastructure supporting payroll, vendor and B2B settlement and automated trade finance and supply chain monitoring workflows. TBG remains committed to supporting the bank's efforts to maintain a diversified portfolio and also to strengthen strategic relationship with leading corporate clients. Our unsecured loan book is at 1.81% of the total advances as at the end of March 2026, which is one of the lowest amongst the peers. Our partnerships for co -lending with NBFCs continue to perform well, and the loan book under this segment is about INR249 crores. We had deliberately reduced the book as it was not ROA accretive. As mentioned earlier, as our RAM Verticals are sustaining their organic growth momentum, we would keep this co - lending as secondary to our organic growth. The bank's liability business constitutes to 54% of the total business of the bank. Total deposits grew by 13.31% during the year, driven by gains in both retail term deposits and CASA. CASA balances grew by 12% and INR3,290 crores is the actual growth during this year as against INR677 crores during last year, highest in the last 10 years in terms of actual growth. So demand deposits grew by 10% compared to 1% growth in the corresponding period of previous year. Savings deposits grew by 13% with incremental growth of INR2,505 crores, which is again the highest in terms of the actual amount. The total deposits, excluding certificate of deposits, grew by 2.66% on a quarter -on-quarter basis. The subdued growth in term deposits in the last quarter was a conscious call taken. You are aware that we front-loaded our retail deposit growth in the first quarter itself with a growth of 5.3%. We also did not go for bulk deposits at the fag end of the year. Our bulk deposits grew by 9% year-on-year as against 44% in the corresponding previous period. Certificate of deposits was a tune of INR1,773 crores were also reduced during last quarter. This was a determined decision to optimize funding costs given the elevated CD rates during March. As all of you know, it ranged between 7.75% and sometimes 8.5% for 3 months to 1 year. These efforts substantially reduced our cost of funds by 9 basis points in the last quarter. All these were taken considering a moderation in advances growth and need to maintain margins in mind in the last quarter of the year. And assisted with this, the normal repricing of the RTD what has happened also, that also supported us a lot in the reduction in the cost of funds as well as cost of deposit. Our approach to focusing on higher balance savings account variance through both branch and sales channels has delivered encouraging outcomes. The average balances for newly acquired customers have demonstrated robust year -on-year progress in current accounts, savings accounts and overall CASA with an annual growth of 44%. Existing customers contributed a 4% increase this year, indicating that there are options available for customers to allocate their funds outside of traditional banking channels. Overall, the combined portfolio shows consistent advancement in acquisition quality and relationship strength, helping to build a more resilient and balanced CASA franchise. The bank is strengthening its presence outside Tamil Nadu by partnering with institutional clients and state government bodies to capture recurring payment flows, which directly enhance deposits and customer visibility across these markets. Retail deposits increased by 11% during the quarter compared to 8.59% previously, demonstrating the branches' focus on attracting stable granular retail deposits for long-term stability. In terms of margins, '25-'26 year was marked by sustained pressure throughout the year. Rising funding costs and repo rate reductions till the third quarter of the year created ongoing challenges for the banks. With respect to net interest margins, we provided a guidance in the range of 3.7% to 3.75% for financial year '25 -'26 at the beginning of the year. We improved the guidance in the last call that NIM would be around 3.9% to 3.95% for the full year. I'm happy to say that we were able to maintain a NIM for the full year at 3.97%. If you can look at it, 4.11% actually, including one -off, the interest from the written -off accounts as well as the interest on income tax refund. So if you exclude that, it is 3.97%, which is literally as per just above our guidance. NIM for the fourth quarter was 4.25%, excluding 7 basis points interest income from tax refund -- income tax refund. This represents a 26 basis points increase from the prior quarter, primarily driven by 9 basis points reduction in the cost of funds and 18 basis points increase in yield of funds. The cost of deposits reduced by 13 basis points on a sequential basis as a major part of the deposits repriced during the year. The yield on advances increased by 16 basis points during the quarter. We were able to stem the reduction by improving our fixed rate loans in our asset portfolio mix. Our fixed rate loan book, which was at 23% in the total book at the end of December has now increased to 29% at the end of March '26. MCLR loan book has reduced from 20% to 14%. During the same period, EBLR book remained at 55%. Yield on investment has increased by 19 basis points during the quarter. For the full year, yield on investments was 6.68%, showing an increase of 7 basis points from 6.61% of the previous year. We have achieved operating profit of INR1,247 crores for the quarter and INR4,075 crores for the full year, a gr owth of 27% over previous year. Our net profit touched a high of INR725 crores for the quarter and INR2,500 crores for the full year, a growth of 29%. So all of you must be knowing this quarter profit as well as the annual profit are highest in the history of the bank. Our operating expenses for the quarter is INR728 crores. Establishment expenses was at INR341 crores, decreased sequenti ally from INR363 crores, mainly due to lower pension obligations on account of increase in discount rates. Other opex increased to INR387 crores from INR380 crores sequentially, mainly on account of increase in rents, repairs and maintenance and channel -related fee, DSA commission and tech - related expenses. For full year under review, opex had gone up by 2.45% over previous year. For the quarter under review, we have provided a sum of INR116 crores towards NPA migrations, aging provisions and INR7 crores for standard assets. We had a reversal of INR10 crores on release of provisions under restructured advances. Credit cost works out to 0.45% on an annualized basis. We have provided prudentially INR163 crores, I repeat INR163 crores is a onetime towards sectors identified that may get affected due to ongoing geopolitical tensions. So total provisions, including standard restructured, NPA, prudential and floating provisions as at the end of the year is INR1,747 crores, which work s out to 1.77% of our advances. Our gross slippages during the quarter was at INR187 crores. And for the full year, it was INR744 crores, which is 0.75% of our loan book. Slippage ratio, it is for the full year. If you can look at it, during the second quarter, we had some sort of a chunky slippages were there. So it comes to around INR200 crores. So INR744 crores includes the INR200 crores also. SMA 30-plus numbers were at INR172 crores at the end of March '26, which is 0.17% of our loan book, reduced from 0.3% of the previous year, indicating continued grip over this aspect. With our persistent focus on recovery from technically written -off accounts, we were able to recover a sum of INR216 crores during the quarter. Total recoveries during the year is INR679 crores from the written -off accounts, excluding INR139 crores interest recovery, which we have got it in one of the quarters, earlier quarters as against INR638 crores of 2024 -'25. Our gross NPA has come down marginally to 0.75% as against 0.76% of last year. Our net NPA remains at the level of 0.19%, and we would continue to maintain net NPA at less than 1% of our loan book. Our standard restructured book is further reduced to 0.41% of our loan book, and the book is performing well, and we do not foresee any major setbacks, slippages from the book. Above all, many of them are backed by real estate collateral, and we are holding a 40% provision for the said books. Our cost -to-income ratio for the quarter is 37%, supported by higher recoveries, interest on income tax refund and lower establishment costs. And this is for the quarter and 42% for the full year, which is within the guidance of below 50%. Our CRAR continues to be healthy and is at 18.76%, providing us comfortable headroom for growth. There may not be any need to raise money in financial year '26 -'27 for the growth plan as our plough -back of net profits wil l take care of our growth plan. Our LCR is at 125.47%. The share of digital transaction stands at 98%. We have rolled out our new version of our mobile DLite app with enhanced features during the year. I'm happy to say that the rating for this app is 4.8 in Google Play, Google Play Store and 4.6 in Apple Store, and there are 2.5 million monthly active users for our DLite app and 7 million DLite downloads for the app. We have achieved an ROA of 2.1% in this quarter and 1.93% for the full year. I'm happy to share that we have declared a dividend of 130% as declared last year, and this is subject to shareholders' approval. Of course, we need to see, so last year, we have issued a bonus share. So every 5 shares, 1 bonus share, we have given it. So this year, when we are paying this 130%, so the payout will be relatively more because we'll be paying on the bonus shares what we have issued. Now let me move on to what we intend to do in financial year '26 -'27. The global financial system faces significant challenges and uncertainty. Geoeconomic fragmentation driven by tariffs, trade restrictions and industrial policies is reshaping supply chains and fragmenting financial movement. As stated in April 2026 monetary policy, high frequency data up to February 2026 show continued economic growth led by strong priv ate consumption and investment. However, conflict in West Asia could impede progress, increased input costs from energy prices, freight, insurance and supply chain disruptions are expected to limit expansion. The MPC noted that the conflict's intensity and duration, along with related infrastructure damage raised risks for inflation and growth. India's economy remains resilient with strong fundamentals to absorb shocks. It is prudent to wait and watch the changing circumstances and the evolving growth inflation outlook. Considering all the above, the outlook for '26 -'27 remains cautious, moderated growth. We need to navigate the challenges carefully without compromising on the quality, which we have got it all along with a lot of efforts. We expect our credit growth to be 1% or 2% over the industry growth. We have been focusing on margins for the past 2 years -- past few years. Considering the current scenario, we must take a strategic bet on preserving relationships over margins. We need to balance both top line as well as the bottom line. Our RAM Verticals would continue to sustain the momentum. With respect to commercial, the relationship manager model approach under small business group would focus on increase in the ticket size in that segment. Business banking team would focus on non -fund business and export -orient customers for increase in transaction -based fee income in addition to regularly what they do the working capital business. Under MSME segment, we may need to compromise on margins to some extent. In retail assets, our main goal is to further enhance collaboration between branch es and the open market channel. Over the past year, the bank has established a partnership for affordable housing, which will be expanded cautiously. We plan to launch premium credit cards in the first year of this year. LAP segment is experiencing strong pricing competition, making both customer retention and new acquisition a bit challenging. If we focus solely on maintaining margins, quality might become a concern. Our IT integration for loan against mutual fund is at the fag end and is expected to be launched in the first half of this year. Given the uncertainty in the external environment, it will be necessary to pursue corporate lending in a risk -calibrated approach. Under credit substitutes, we will be focusing more nonfinancial services customers for this year. The jewel loans portfolio encompassing all verticals accounts for 30% of the bank's overall portfolio. We maintain an internal cap of 35%, growth will be pursued in either retail or agriculture segments based on prevailing circumstances as increased expansion in retail would also indirectl y elevate the PSL requirements. We continue to focus on enhanced monitoring to take care of gold price fluctuations. Our credit business mix, RAM and corporate would be in the mix of [18% to 20% as what we were mentioning earlier. However, it may toggle between another 5% allowance here and there can be there. Within the liability segment, we will maintain our dual approach of pursuing new acquisitions and strengthening existing partnerships. This vertical has transitioned from traditional deposit mobilization to a technology -enabled transaction anchored franchise. Key focus areas include enhancing transaction banking services, expanding merchant ecosystems through expedited merchant acquisition and increasing CASA by leveraging institutional business initiatives. A dedicated NRI channel is planned to be rolled out. With respect to margins, we expect that NIMs to be in the range of 3.75% to 3.8% for the full year, though we are at 4% plus at the exit quarter of this year. So we envisage a drop in margins due to expected rate increase in the retail time deposits. So you would have seen that we already increased rates in April 2026, and it will kick in from this quarter itself, the higher cost of deposits. In addition to that, we expect a drop in the yields on the advances side due to prevailing competition and to retain the relationships. Considering the uncertainties in the market, there may be fluctuations during the quarters. Our endeavor is to maintain within the above range for the full year. So you can recollect that last year also, we have conveyed the same thing when we are giving the full year guidance. So 1 quarter can be here and there, but our endeavor is to deliver that number within the full year. So tactically, depending upon the opportunities available, we will be taking calls. One quarter may be low, 1 quarter may be high, but we'll keep in mind the full year. We expect 15 to 20 basis points investment portfolio yield, yield enhancement through strategic rebalancing of the HTM portfolio during '26-'27. Our duration is relatively low at less than 4 years. We will maintain around 4 to 4.5 years in the medium term. Portfolio tilted with the yield curve expectation at any point of time. Our efforts on recoveries will continue, and we will take efforts to sustain the momentum. With respect to branch expansion, we are planning to open 50 branches. Out of that 38 will be regular and 7 will be liteand another 5, we are going to shortlist shortly. So to the extent possible, how best we can front -load in the first half year, we will see that so that we'll get the benefit in the second quarter from these branches opened. Our cost -to-income ratio would be below 50% as we have been continuously planning, and we'll endeavor to retain that way. GNPA is expected to be less than 1.5% and net NPA to be less than 1% for the full year. Slippages would be expected to be below 1% of the asset book. LCR would be maintained around 115% to 120%. RBI has issued final ECL provisioning guidelines, which we are reviewing. The bank has maintained adequate provisions and buffers through floating and prudential provisions over the past 3 years. With strong asset quality and provisions to advances at 1.77%, we expect minimal impact from this transition. The bank recognizes that environmental, social and governance principles are fundamental to sustainable growth and responsible banking. Our commitment extends beyond compliance, focusing on real -world impact through ethical governance, environmental stewardship and social responsibility. By integrating ESG into our core business strategy, the bank aims to enhance financial resilience while contributing to a sustainable future. Our ESG rating has improved to 68, which implies is a strong rating for the financial year '24 - '25. It is awarded by CRISIL, demonstrating continuous enhancement in nonfinancial performance. We achieved a return on assets of 1.93% for the whole year of financial year '26 and 2.1% in the last quarter. There were one -off items for '25 -'26 that contributed t o 0.12% to our ROA calculation. Given the current macroeconomic environment and the anticipated effects on the net interest margins discussed earlier, we expect the ROA for the full year to be between 1.7% to 1.8%. Nonetheless, we remain committed to exceeding the expectations to the extent possible. So our primary areas of focus will be to continue to have the focus on the growth, asset quality and profitability. We understand the environment. It will be volatile, but we are prepared to adapt while keeping these core metrics strong. Finally, I'm grateful to all the investors, analysts and stakeholders for their confidence and continued support, which we will reciprocate through our better performance in the years to come. Now I'll be much glad to respond to your questions. Thank you. Thank you, all.
In fact, I mentioned between 3.75% to 3.8%. So , in fact -- thank you, first of all, for the compliments. And now for this reason, 3.75% to 3.8% also, I elaborately explained the reasons why we wanted to do. Fundamentally, if you look at it, there are a few factors we need to keep in mind. The cost of deposits, though we were thinking saying that the environment will be much easier and all you will be able to get that. But still there is some sort of a tightness in the market. That is the reason we expect the cost of deposits to go up further, retail deposits also. And the second thing on the yield, so we have been pretty holding the rates -- interest rates, in the process, we find the leakages have become more. Many of the existing accounts when others are offering very finest rates, we are losing. Now the stage has come, getting back these connections will become pretty difficult over a period of time if we still hold these rates so strong. So we may have to concede and reduce the rates to existing customers and also for the acquisition also, we have to be in the market, though as I said, our ETB, the disbursements are 29% on the commercial. So it may taper over a period of time. That is the reason we need to take a conscious call, having such a strong NIM is good to have, but not at the cost of continuously losing the top line. So that is the reason what we thought, keeping all these things in mind. So we may have to compromise to some extent on the NIMs in this year. That's why I suggested for 3.7% to 3.8%.
Karur Vysya Bank Limited CC-Mar25.pdf · 2025-05-19
Thank you. Thank you very much. Good evening to all of you. On behalf of Karur Vysya Bank, I welcome you all to our Bank's Earning Call for Quarter 4 of the Financial Year 2025. We have uploaded our financial results along with the presentation on our website and I hope you have had a chance to go through it in detail ahead of this call . Before going to our performance , I heartily welcome Mr. Sankar Balabhadra patruni to the con -call, who has joined our Bank as Executive Director. Mr. Sankar, a seasoned banker and a former DMD , Deputy Managing Director of State Bank of India, has more than 3-1/2 decades of professional banking experience in various areas in the banking domain. We are pleased to share that our performance indicators are in line with our guidance that we had spelt out in the beginning of the Financial Year ’24-25 and it is encouraging to note that our consistent and inclusive performance is well above our guidance on 3 metrics, growth, profitability and asset quality. The Bank's total business stands at Rs. 1,86,569 crores as on 31st March 25 as compared to previous year Rs. 1,63,536 crore, registering a growth of 14%. The advances stand at Rs. 84,491 crores and deposits grew to Rs. 1,02,078 crores with the growth of 14% each. We had indicated at the beginning of the year with respect to the business mix of our advances portfolio with more focus on RAM vertical. In tune with that RAM verticals have grown by 20% year-on-year that is 3% quarter-on-quarter constituting 86% of the overall advances portfolio. Commercial loan book increased its share to 36% and both retail and agriculture gro wth had a share of 25% each. The commercial business continued to grow at 21% over the previous year, with significant contributions from various channels during the year. In spite of various challenges, the agriculture loan book had a growth of 20% year-on-year, 6% quarter-on-quarter and achieved all the targets and sub targets under priority sector for all the quarters of the year and priority sector advances as a percentage to ANBC as on 31st March 2025. We are very cautious with our MFI portfolio, which we ventured in a small way 2 years back. We have commenced covering under CG FMU from 1st April 2025. The total outstanding is currently only 0.37% of the overall portfolio. Though it is small, we are cautious in ramping up and shall wait for one or two quarters more. You are aware that we integrated open market channel with the branch channel as Consumer Banking Department – Assets asset at the beginning of the year. The synergy has resulted in growth of 18% during the year under review. Mortgage loans grew by 34% over last year. The focus is more on cash flows rather than solely relying on collateral. We have strengthened our monitoring mechanism using predictive analytics too, to spot the stress much early . With the experience gained all along, we found it reasonable to ramp up this book as it is fully secure and offers a reasonable risk reward. Retail gold loans also grew by 61% and housing loans by 12% over the previous year. Our co-lending Amazon BNPL program is performing well, and the book is around Rs. 844 crores. In view of the household elevated leverage, we are cautious in ramping up this book. We have further tightened our on -boarding norms to exercise caution at present and shall review periodically to relax and to ramp up the book in due course as all the enablers are in place. Corporate and institutional book had a degrowth of 14% during the year. This resonates with our indication during the quarterly calls our preference over margins than the topline growth. Repayments and closures amounted to Rs. 1,269 crore during the year. Also, we have decided to wind up the precious metal division, which we st arted in 2019 as it was not ROA accretive . We had outstanding of Rs. 674 crores at the beginning of the year and reduced to Rs. 41 crores on 31/03/2025. The above factors resulted a degrowth in the corporate portfolio. However, the vertical explored investing in corporate instruments of corporates w here lending margins were low as credit substitutes during the year and investments outstanding Rs. 350 crores were made as at the end of March 25. This will continue for the coming year too. In view of the tightness in raising CASA resulting in elevated cost of deposits lending to corporate still do not appear to be margin accretive. Hence for the first half of 2025-26 also, we may adopt same strategy to focus on RAM till proper mix of deposits comes back. Transaction Banking Group continues to support the Bank for a diversified portfolio and anchors top corporate relationships. We are in the final stages of upgradation of the platform to meet the requirements of the business and we will focus on this area too in the periods to come. Our partnerships for co-lending with NBFCs continue to perform well and the loan book under this segment is above Rs. 472 crores. We have consciously lowered this book due to lower margins. We will ramp up once the mix of deposits returns to normalcy . As our RAM verticals are sustaining their organic growth momentum, we would keep this co-lending as secondary to our organic growth. Our unsecured loan book is 2.22% of the total advances as at the end of 31st March, which is very low among the peers. The low base offers us a tremendous opportunity to offer various personal loans and other products to those curated and tested customers of our BNPL book. Currently, w e will be low on this, and we have this opportunity to grow with partners in due course. The Bank's liability business constitutes 55% of the total business of the Bank. With respect to liabilities, Financial Year ’24-25 threw many challenges like shift in customer preferences with respect to investment needs just in time disbursement of funds by the government departments, this resulted in lot of pressure in sourcing liability business. Most of the banks launched special FD schemes for shorter periods. In spite of all these challenges, I am very happy to say that our deposit figure crossed the landmark figure of 1 trillion during this year. Deposit growth continued to remain one of the key focus areas for the Bank and you are aware that the Bank had initiated various strategies for deposits including the establishment of an acquisition channel for both term deposit and CASA growth. Our term deposit growth during the year is at 20%. The share of short -term deposits or total deposits increased for all banks in the industry , so we are not an exception. Our CASA grew by 3% over the previous year . Financial Year ’ 24-25 was the first full year of our acquisition channel. The Bank had also launched new variants in CASA products. This resulted in opening more than 19,000 plus a ccounts with balances more than Rs. 400 crores. Specific segments have been formed under CASA acquisition channel, targeting institutional clients, corporate salary accounts, trade and FOREX customers. While our CASA acquisition numbers are progressing well, there is depletion in the existing with book on account of other opportunities available for the depositor resulting in lower growth under this segment. Our asset verticals also have started mobilizing deposits as we introduced the self-funding concept during the year. With respect to margins , the Financial Year ’ 24-25 was a year where margins were under pressure throughout the year. Raising cost of funds, expected rate cuts though happened only in the last quarter increasing floating rate asset book all kept the banks in tenterhooks throughout the year. Considering the above factors, we had indicated in the last call that our NIM would be around 3.85 at the exit quarter of the year. I am happy to say that we were able to maintain NIM for the 4th quarter at 4.05% and for the full year at 4.09%. NIM dropped during the year by 11 basis points from 4.2 during the previous year. Our continued rebalancing of the portfolios with more focus on better yielding , granular, secured advances in RAM verticals has helped us to maintain the margin above 4% level. The cost of deposits increased by 8 basis points sequentially as against 10 basis points guided by us in the last call. For the full year, the cost of deposits was 5.61% showing an increase of 42 basis points from 5.19% of the previous year. The yield on advances increased by 3 basis points during the quarter in spite of the rate cut. For the full year, the yield on advances was 10.15%, showing an increase of 20 basis points from 9.95% of the previous year. Our continued efforts on rebalancing of the portfo lio with focus on high yielding products falling within our risk appetite in RAM verticals has resulted in this growth. The yield on investments has increased by 14 basis points during the quarter. For the full year, the yield on investments was at 6.61%, showing an increase of 38 basis points from 6.23% of the previous year. Given our expectation that interest rates will stabilize at current levels or potentially decline slightly, we plan to maintain the current duration, thereby rebalancing interest rate risk and investment returns. We have achieved operating profit of Rs. 835 crores for the quarter and Rs. 3,212 crores for the full year, a growth of 20% over the previous year. Our net profit touched a high of Rs. 513 crores for the quarter and Rs. 1,942 crores for the full year. Our operating expense for the quarter is at Rs. 764 crores , e stablishment expenses was at Rs. 385 crores increased sequentially by Rs. 12 crores, mainly on account of the increase in pension obligations on account of drop in yields. Other OPEX increased to Rs. 379 crores from Rs. 3 57 crores sequentially, mainly on account of increasing channel related fee , DSA commissions and tech related expenses. For the full year under review, OPEX has gone up by 9% over the previous year. For the quarter under review, we have provided a sum of Rs. 136 crores towards NPA migrations, standard assets and prudential provisions and credit costs works out to 0.64% on an annualized basis. As done in the last 3 quarters, we have provided a sum of Rs. 25 crores towards the prudential provisions and cumulative provision available under this is Rs. 100 crores. Our gross slippage during the quarter was at Rs. 179 crores and for the full year it was Rs. 482 crores which is 0.57% of our loan book . SMA 30+ numbers were at Rs. 254 crores as at 31/03/2025, which is 0.3% of our loan book reduced from 0.38% of the previous year, indicating continued maintenance of control over this aspect. With our persistent focus on recovery from technically written-off books, we were able to recover a sum of Rs. 182 crores during the quarter . Total recovery during the year is Rs. 638 crores as against Rs. 341 crores of Financial Year ’23-24. Due to lower slippages, recoveries, upgrades, and write-off, our gross NPA has come down to 0.76%. Our net NPA remains at a level of 0.2 and we would continue to maintain the net NPA at less than 1% of our book. Our standard restructured loan book is further reduced to 0.64% of the loan book and is performing well and we do not foresee any major setbacks or slippages from the book. Above all, many of them are backed by the collateral, and we were holding 41.24% provision for the said book. Our cost-to-income ratio for the quarter is 47.77% for the quarter and 47.25% for the full year, which is within the guided range of below 50%. Our CRAR Basel-III continues to be healthy and is at 18.17% providing us comfortable headroom for growth. There may not be any need to raise money in Financial Year ’25-26 for the growth plan. Our digital transactions grew by 115% in Financial Year ‘25 and the share of digital transactions stands at 98%. We have rolled out our new version of our mobile DLite App with enhanced features during the year. I am happy to say that the rating for the App is 4.7 in Google Play Store and 4.1 in Apple Store and there are 1.3 million monthly active users for our DLite App and 5 million downloads for our DLite App. We have achieved a ROA of 1.73 in this quarter . It could be noticed that our ROA has consistently improved from 0.19% in December 20 and grown sequentially in the last 21 quarters, which is the result of our concerted efforts in stimulating the various levers of ROA and enabled us to achieve this parameter well ahead of timelines . I am happy to share that we have declared a dividend of 130% as against 120% last year and this is subject to shareholder ’s approval. Now, let me move on to what we intend to do in ‘25-26: The financial landscape is witnessing a dramatic transformation globally as well as in India, driven by technological innovations, changing consumer preferences and emergence of alternative business models. The Reserve Bank of India is expected to adopt a more accommodative monetary policy stand s. This could involve further rate cuts to stimulate domestic demand and support economic growth. The sudden escalation at the border in the last few days has also added more uncertainties for the coming year. Considering the above , the outlook for the Financial Year ’25-26 remains cautiously optimistic, we need to navigate margin pressures too and monitor asset quality closely. We expect our credit growth to be more than 2% over the industry growth. Our RAM verticals would continue to sustain the momentum with an eye on the margins. Corporate book has come down to 14%, however, this is a temporary phenomenon which would come back once liabilities pressure eases off , the moment liability pressure eases off, we will have the proper mix of liabilities. Given our diversified corporate exposure to NBFCs and other corporate entities, we see merit in exploring great opportunities through investment route, particularly in the corporate rated AA- and below where risk adjusted returns remain attractive. We would continue to look for credit substitutes , opportunities in corporate vertical as we did last year. The credit growth would align with our growth in liabilities. We are sanguine that the branch and sales acquisition channel would continue with greater rig or for sourcing the raw material and our branch channel team would put their efforts to maintain the balance in the ETB books. The CD ratio would be maintained at around 85% levels during the coming year too. We have added 50 branches during the Financial Year ’24-25, so 38 branches were Lite branches, and 12 branches are regular branches . With respect to branch expansion for the current year, we have planned opening 19 lite branches and 9 regular branches before the end of the first half of the current year, mostly in the Southern and Western parts of the country. We believe the peak in retail and wholesale deposit rates is now behind us and we are witnessing a decline in deposit rates accompanied by a drop in CD rates. Given the lagged impact of deposit cost movements, we anticipate a decrease in the cost of deposits for the banks starting from the second quarter of this financial year. With respect to margins , as two more rate cuts are expected, we expect that NIM to be in the range of 3.7-3.75 for the full year. Our loan book comprises of EBLR book of 52% and MCLR book of 37%. Considering the uncertainties in the market, there may be fluctuations during the quarter. However, our endeavor is to maintain within the above range for the full year. Considering our branch expansion and additional manpower plant, our cost to income ratio would continue to be around 50% in ‘25-26. Our efforts on recoveries should continue and we expect the momentum gained in the last year will be retained in the Financial Year ’26 too. GNPA is expected to be less than 150 basis point s and net NPA to be less than 1% for the full year. Slippages would be expected to be below 1% of our asset book. We have achieved a ROA of 1.72 in Financial Year ‘ 25 and 1.73 for the last quarter . Quarter-on-quarter, we have been improving this and our ROA was at above 1.5 throughout all the quarters for the last 2 years. We expect with the reasons adduced above, we will continue to maintain our ROA. It will be in the range of 1.55-1.65. Renowned Warren Buffett recently mentioned when asked about on protecting progress , h e mentioned “the question is how do you keep it and how do you improve it.” We want to protect progress by focusing on margins, which is the key to sustainable profitability and long -term success. It is a hallmark for the health and efficiency of Bank’s operation. This does not mean saying that we will be totally compromising on the topline. So, as I said earlier, our topline growth under advances can be 2% above the industry. I am grateful to all investors, analysts and stakeholders for the confidence and continued support which we will reciprocate through our better performance in the days to come. Before I conclude, I would like to thank our E D, Mr. J. Natarajan, who is demitting office on Wednesday for his excellent support and guidance for the growth of the Bank over the years. On behalf of all, we wish him the best in all his future endeavors. Now, I am glad to respond to your questions.
Hi Ja i, first of all, thanks for the greetings and Jai, in fact these two are different sets of operations. What we are talking about, the RBI jewel loans is what in the branches we dispense that will continue as we are doing both under agriculture as well as the retail segment. This was another segment which we have created precious metal. So giving a bullion loan to the manufacturers of jewellers, so that being because the margins are very few and what we thought is it is not accru al to the whole ROA and above all on those lines where margins are low also, you need to maintain a CD ratio. On one side, the deposit cost has gone up. It is not making much sense for us overall also. So that is the reason what we thought is there is no point because last 4-5 years, if you look at it, the overall book we have built is Rs. 650 crores. So that is why we thought that. So let us focus our rest of the things and all. We have come out that way, these two are altogether different.
Karur Vysya Bank Limited CC-Dec24.pdf · 2025-01-20
Thank you, Rikin. Thanks for the question. And first of all, regarding the jewel loan is concerned, all of you would have seen the September ending Reserve Bank of India guidelines. So what I mean to say is those guidelines what all Reserve Bank has given, so we are in compliance of that. So that's what. So that's why there are many measures what we need to see for the documentary evidence, the purpose for which we have given there and all - mentioned, we are in compliance of that. That is the intent of my statement. Coming to the restructured provisions, absolutely we are not finding any additional stress out of that. So what we thought is prudentially it is better. We create when good times are there always I men tioned that, we should not forget about the bad times. That is the reason as a prudential measure, we have provided for that and nothing beyond that, there is no need for any sort of a panicky situation as far as restructured book is concerned, you would h ave observed that. Total book itself is around 0.7%. So that too majority of those accounts particularly under the retail segment and the commercial segment, they are all backed by security. Even if tomorrow eventuality comes, they may become NPA also. In a gap of 1 year or so, 1 year, 1.5 years, we'll be able to recover the money, but the situat ion will not be there that way. Coming to ECL, our CFO, will respond. Yes.
Okay. Coming to the jewel loans, what we've said is suppose when we are taking a documentary evidence that he is a farmer and he is having the farming activity, that itself will ensure saying that we are lending to a farmer and not for any other purpose for speculative purpose. So coming to the rollover of these things, even before RBI started giving these guidelines itself, we have stopped long back th e rollover. So someone will have to close the loan and all, they had to take it. So that way what I say, so we are in compliance with the RBI guidelines. That's what my point is. Coming to MFI is concerned for partners, but you would have seen that more or less 2 years back we have started the MFI business, b ut with all these things also because we are very cautious in going through that one, the total portfolio as on date is around INR350 crores. So what -- my point is if we are trying to grow , Telangana is one of the state where the recoveries are good. And to some extent that way, Karnataka is also recoveries are pretty good that way. And a few districts of Tamil Nadu also the point is good. So for the time being, we are not extending much our operations in the Kerala. Otherwise, North and all Bihar, Chandigarh, Punjab rest we do not have any other operations. Hardly, it is majorly in the Telangana, Karnataka and Tamil Nadu. So now co ming to the provisioning policies, internal policy what we have. But my point is, if you look at it the overall net NPA is around INR160 crores and we have sufficiently provided for that. So I think there is no point in having a separate discussion on the policy because the Board has -- we have discussed with them and all. So what we need to do accordingly, we are doing it.
Karur Vysya Bank Limited CC-Sep24.pdf · 2024-10-17
Thank you. Thank you very much. Good evening to all of you. On behalf of Karur Vysya Bank, I welcome you all for our bank's earnings call for the quarter 2 of the financial year 2025. So we trust that you, your colleagues and family members are keeping well and are in good health. So we have uploaded our financial results along with the presentation on our website and I hope you have had a chance to go through it in detail and ahead of this call. I am pleased to mention that the bank continued to have another strong quarter of performance built on our guidance of three metrics; growth, profitability and asset quality. Bank's performance indicators are in line with our guidance, and the bank is seeing consistent and steady growth. It is encouraging to note that our team was able to sustain the growth momentum witnessed in the first quarter. And I am confident that the same will continue in the ensuing quarters. The bank's total business stands at INR1 ,76,138 crores as on 30th September 2024 . We were able to sustain the growth impetus created during the first quarter as our total business registered a growth of 4%. The advances stand at INR80,299 crores and deposits grew to INR95,839 crores with a growth of 3% and 4%, respectively. We have been guiding in our earlier calls about our focus on inclusive growth from all verticals with respect to advances. I am pleased to share that the same is being sustained in the RAM verticals with 5% quarter - on-quarter loan growth. Commercial advances clocked 6% growth. Retail advance and agriculture advances grew by 4% each. Retail growth was predominantly driven by mortgages, which grew 10% during the quarter. Housing loans grew by 3% and jewel loans by 7%. Our BNPL book remained flat during the quarter. Agri Jewel loan book grew by 4%, corporate book has degrown by 4% during the quarter, mainly due to lower availments in certain seasonal sectors, lower disbursements, repayments. And of course, as I always say, wherever the pricing was not conducive enough, so on our own we have exited those accounts. Deposit growth remains one of the key focus areas for the bank, and you are aware that the bank had initiated various strategies for deposit growth, including establishment of sales acquisition channel for both term deposits and CASA growth. Our total deposit growth was at 4% during the quarter. Depletion and balances in existing CASA book has resulted in growth of only 1% sequentially. Term deposits grew by 5% during the quarter. We had indicated in the last call that NIM would be above 4% levels til l first half of the current year. I'm happy to say that the NIM for the quarter is at 4.11%, and for the half year, it is 4.12%. Our continued journey on shedding away low -yielding corporate advances on one side and focused more on better yielding granular secured advances in RAM and prudent treasury operations have helped us to retain above 4.1% level s of NIM during the quarter in spite of 8 basis points increase in the cost of deposits. The cost of deposits increased by 8 basis points and the yield on advances reduced by 2 basis points sequentially. Yield on investments increased by 2 basis points during the quarter. Based on our historical pattern of renewal of deposits and fresh deposits acquisition, we expect moderated rise in the cost of deposits by 10 basis points in the next quarter. Yield on advances is expected to be flat, and yield on investments would be in the similar range for the second quarter -- of the second quarter. Considering all these factors and without taking into any policy rate changes, we expect that NIM will be around 4% in the next quarter. We have achieved ROA of 1.72% in this quarter. We had guided that our effort would be to ensure ROA is above 1.65% levels and we are confident to maintain the same going forward also. Our gross slippages during the quarter continued to be under control at INR181 crores, which is 0.23%. On an annualized basis, it comes to 0.9% of our loan book. With our continued close monitoring of accounts we are confident that we'll continue to keep the ratio below 1% as guided in our earlier call. Our efforts on recovery of technically written-off books is continuing to yield results as we have recovered a sum of INR180 crores during the quarter. Due to lower slippages, recoveries, upgrades and write -offs, our gross NPA has come down to 1.1%. We expect that we will continue to maintain at below 2% levels as advised earlier. For the quarter under review, we have provided INR155 crores towards NPA migrations and INR10 crores towards standard assets and reduction in restructured assets provision by INR9 crores on account of reduction in balances aggregating INR156 crores, which is 0.78% of our advances on an annualized basis. Apart from this, we have provided a prudential provision of INR25 crores as was done in the previous quarter. Our net NPA has come down to 0.28%, and we will continue to maintain net NPA at less than 1% of our loan book. Our standard restructured loan book is further reduced to 0.79% of our loan book, and we hold a provision of 39.85% of the standard restructured book. The BNPL book balance is at INR1,030 crores as at the end of September, that is which comes to 1.28% of our portfolio, and it is performing well. Our overall unsecured portfolio ,including the BNPL, of the total advances comes to 2.04%. Our MFI portfolio, which we started just two years back and we have started taking baby steps in that now stands at INR298 crores as at the end of 30th September '24. We are taking a very cautious approach in this segment. We have tied up with three business correspondents who have sort of an expertise in this as partners, and we'll be mindful in growing selectively in states where position is relatively better. Our establishment costs were INR357 crores during the quarter, increased by 7% sequentially, mainly on account of AS-15 actuarial provisions, which were up by INR13 crores compared to previous quarter due to steep fall in the discount rates. Operating expenses were at INR358 crores, sequentially gone up by 7%. Our cost -to-income ratio is at 46.72%, and we will continue our efforts to peg it within 50%. Our CRAR, as per Basel III continues to be healthy and is at 16.27%, providing us comfortable headroom for growth. Our liquidity coverage ratio continues to be well above the regulatory requirement of 100%. So bank added one branch during the quarter. And the setting up of the lite branches is under progress and the first set of such branches are expected to function on the third quarter of this current year. Our endeavour is to continue the current momentum in the next half of the year. As planned, we are mindful of the challenges, particularly on the liability side and are taking every step to increase the low-cost funds, which would also help us to improve the margins. I am grateful to all our investors, analysts and stakeholders for the confidence and the continued support, which we will reciprocate to our better performance in the days to come. Now I'll be glad to respond to your questions.
Yes. Thank you, Ja y. In fact, Jay, if you look at it, the question is the composition of the deposit growth. So still we find that the CASA book as we planned, it is not growing at the same pace what we planned. Until such time that composition comes up, so it will not make much sense to raise the deposit at 7.6 . Suppose senior citizen is there at 8.1 also we are taking and many of the corporates, if they expect between 9, 9.25 and all. So 8.1 CRR, SLR, credit costs, standard asset provision, operating costs, with all these things, it doesn't make much sense rather than just bloating the book and top line growth. So that's why we would just want to wait and watch. Another point I want to say. So it is interest rate sensitive that is elastic as far as corporate is concerned. So for the rest of them, why we are fuelling the growth in rest of the RAM segment is if you reduce the momentum there, getting back the momentum from the whole team will become absolutely difficult because it's granular, and many people on the ground, they are working on that. As far as corporate is concerned, it is interest rate sensitive. So the moment you are able to offer a better rate, so you'll be able to come back. I'll just give you an example. Our NBFC portfolio, which used to be 8.5% of the total book at a point of time. Now it has come down to around 5% plus. 3% we have brought it down many of the NBFCs there. Suppose tomorrow if you have a reasonable amount of money, the 3% of this INR80,000 crores itself comes to INR2,000 crores odd. So that way, growing should not be a problem, but we want to be conservative seeing the position. The moment we get a hold on the CASA book, it is growing there and all, so we will release the pipe towards CAG also.
Karur Vysya Bank Limited CC-Mar24.pdf · 2024-05-13
Thanks, Rakesh, for the participation and good words. So TD cost, if the current position continues, it may be continued at the more or less same level. As I was mentioning in the remarks -- opening remarks, liquidity is not an issue. cost is an issue. Tomorrow, if we get better opportunities there to deploy the money, then it makes sense for us to raise the money even at a higher cost, then we can go for that. Or alternatively, if the liquidity is under strain, only by raising the deposit cost, we'll be able to get the deposits. At that time we need to think. Otherwise, currently, so we don't feel that there is a need to increase the TD deposit rates at this stage. So if this be the case, in next three months, more or less with the inflows, what we have, the TD cost will remain more or less the same. And above all, the inflow o f time deposits, if you look at it also, majority of them are coming below two years. So that way, it will more or less be same and until unless, we have a problem with the liquidity.
I'll have to see that. The reason is how the deposit cost, how it was -- because there may not be any rate cut, but the liquidity is under st rain. Then we, say, had to raise the deposit cost, then automatically, the margins will be compressed. So if something is not there, at the most, we think between 3.80 to 4% if at all, these sort of situations come up also, at that range, we'll be able to maintain. That's what we feel.