Karur Vysya Bank (KVB), a private sector lender headquartered in Tamil Nadu, reported a 37.28% year-on-year increase in net profit to ₹788 crore for the second quarter of FY27, against ₹574 crore in the corresponding quarter of the previous financial year, driven by strong net interest income, higher fee-based revenue and improved operating efficiency.
Net interest income (NII) rose 18.72% to ₹1,497 crore from ₹1,261 crore a year earlier, while net interest margin (NIM) improved to 4.34% from 4.24%, indicating the bank’s ability to sustain lending profitability despite a decline in the yield on advances.
The bank’s total business expanded 17.96% year-on-year to ₹2,39,712 crore as of September 30, 2026, reflecting growth in both deposits and advances.
Credit growth outpaces deposit expansion
KVB’s advances grew 20.35% year-on-year to ₹1,11,589 crore, compared with ₹92,724 crore a year earlier. Deposit growth was comparatively moderate at 15.96%, taking the total to ₹1,28,123 crore from ₹1,10,492 crore.
The faster growth in advances points to an expansion in credit deployment, although sustaining this pace will require the bank to maintain adequate deposit mobilisation and manage funding costs.
The cost of deposits declined by 11 basis points to 5.49% from 5.60% in the year-ago quarter. However, the yield on advances fell by 18 basis points to 10.20% from 10.38%.
Despite the decline in lending yields, the improvement in NIM suggests that lower deposit costs and other balance-sheet factors helped support the bank’s interest income performance.
Fee income and efficiency support profitability
Non-interest revenue provided another source of growth, with commission and fee-based income rising 14.62% to ₹290 crore from ₹253 crore in the corresponding quarter last year.
Operating expenses increased marginally to ₹770 crore from ₹756 crore, indicating that expenditure growth remained contained relative to the expansion in business and income.
The cost-to-income ratio improved to 39.85% from 42.63% a year earlier. The 2.78-percentage-point reduction indicates that the bank generated higher income relative to its operating costs, supporting the sharp increase in net profit.
The combination of stronger net interest income, higher fee revenue and improved cost efficiency helped KVB deliver profit growth that outpaced the expansion in its loan book.
Asset quality remains strong
The bank reported a gross non-performing asset (GNPA) ratio of 0.69% as of September 30, 2026, down from 0.76% a year earlier and 5 basis points lower than in the preceding quarter.
Net non-performing assets (NNPA) stood at 0.18%, compared with 0.19% a year earlier, improving by 1 basis point sequentially as well.
In absolute terms, gross NPAs increased to ₹765 crore from ₹708 crore a year earlier, while net NPAs rose to ₹199 crore from ₹176 crore.
The increase in absolute bad-loan balances, despite lower NPA ratios, reflects the expansion in the bank’s loan book. The decline in the ratios indicates that advances grew faster than the reported non-performing assets.
The provision coverage ratio stood at 96.13% at the end of September 2026, compared with 96.76% a year earlier. While the coverage ratio moderated, it remained above 96%, indicating a high level of provisioning against identified bad loans.
Capital position strengthens
KVB’s capital adequacy ratio under Basel III rose to 17.97% as of September 30, 2026, from 16.58% a year earlier, comfortably above the regulatory requirement of 11.50%.
Tier I capital adequacy improved to 17.32% from 15.58%. Meanwhile, risk-weighted assets increased to ₹87,496 crore from ₹72,498 crore, reflecting the expansion in the bank’s risk-weighted business.
The stronger capital ratios provide a buffer to support further credit growth while maintaining regulatory headroom.
Branch network expands
The bank had 921 branches and one Digital Banking Unit as of September 30, 2026, compared with 895 branches and one Digital Banking Unit a year earlier. Its network also included 2,192 ATMs and cash recyclers, against 2,225 in the year-ago period.
Semi-urban and rural areas accounted for 54.29% of its branches, underlining the bank’s continued presence beyond major urban centres.
“The business growth has been balanced and broad-based, with sustained performance across our three key priorities: growth, profitability, and asset quality. This reflects the continued strength and resilience of our operating performance since the year’s outset,” said Karur Vysya Bank Managing Director and CEO, Ramesh Babu B.
He added that the bank would remain focused on calibrated growth, operational efficiency, customer centricity and disciplined risk management amid an evolving operating environment.