Karur Vysya Bank (KVB) has once again delivered a strong quarter, reporting a Q3FY25 PAT of ₹496 crore, which is up around 21 per cent year-on-year and beats estimates by 4 per cent. The bank has maintained a robust RoA of over 1.65 per cent for the fifth consecutive quarter. Asset quality remains impressive with net slippages at 0.2 per cent annualized. Adjusted for technical write-offs (TWO) recovery, net slippages remained negative, leading to further improvement in net NPA to 20 basis points.
Despite a strong growth of around 20 per cent year-on-year in granular loans, overall growth was restricted to 15 per cent year-on-year due to a deliberate reduction in the corporate loan book. However, there were some concerns regarding muted fee income growth and soft CASA growth.
Even with a forecast of NIM compression and a slight normalization in TWO recoveries, the bank is expected to maintain a steady RoA of around 1.6 per cent and RoE of around 16 per cent for FY26. KVB has demonstrated resilience in growth, operating expenses, and asset quality, positioning itself well for sustained performance. Additionally, there is potential for upside once the deposits/unsecured PL environment improves.
Overall, Karur Vysya Bank continues to show strength in its financial performance and strategic positioning, making it a favorable investment opportunity.
