Private sector lender Karur Vysya Bank (KVB) reported a strong start to FY27, posting a 44.92% year-on-year increase in net profit to ₹756 crore for the quarter ended June 30, 2026, driven by healthy growth in net interest income, improved margins and better operating efficiency.
The bank’s net interest income (NII) rose 31.76% to ₹1,423 crore, compared with ₹1,080 crore in the corresponding quarter of the previous financial year, while net interest margin (NIM) improved to 4.34% from 3.86%.
Margins improve as funding costs decline
KVB benefited from a lower cost of deposits and improved lending yields during the quarter. The cost of deposits declined by 32 basis points to 5.45%, while the yield on advances increased to 10.11% from 10% a year earlier.
Commission and fee-based income also maintained a healthy growth trajectory, increasing 7.57% year-on-year to ₹270 crore.
Operating expenses rose to ₹769 crore from ₹721 crore, reflecting continued investments in business expansion. Despite higher expenses, the cost-to-income ratio improved significantly to 41.24% from 47.24%, indicating better operational efficiency.
Capital position remains strong The bank further strengthened its capital base during the quarter. Its Capital Adequacy Ratio (CRAR) under Basel III norms stood at 18.61% as on June 30, 2026, well above the regulatory requirement of 11.50% and higher than 17.36% a year earlier.
Tier-I capital improved to 17.98% from 15.58%, while risk-weighted assets expanded to ₹80,661 crore from ₹69,441 crore, reflecting business growth.
Asset quality stays healthy
KVB continued to maintain one of the strongest asset quality profiles among private sector banks. Gross non-performing assets (GNPA) stood at 0.74% of gross advances as of June 30, 2026, compared with 0.66% a year earlier, though it improved marginally on a sequential basis.
Net non-performing assets (NNPA) remained well below 1% at 0.19%, unchanged from the year-ago period.
The bank’s Provision Coverage Ratio (PCR) remained robust at 96.21%, providing a strong cushion against potential credit stress.
Branch network expands
KVB continued to expand its physical presence during the quarter. As of June 30, 2026, the bank operated 903 branches, one Digital Banking Unit and 2,169 ATMs/Cash Recyclers, compared with 888 branches a year ago.
Around 55% of its branches are located in semi-urban and rural areas, supported by a network of 338 business correspondents, underlining its focus on financial inclusion.
Front-loads growth
Karur Vysya Bank Managing Director & CEO Ramesh Babu B said the bank’s performance was in line with its stated guidance and reflected a strong start to the financial year.
He said the bank had successfully front-loaded growth during the first quarter, a strategy it has consistently followed in recent years. The sustained performance across growth, profitability and asset quality demonstrates the resilience of its business model and the momentum built since the beginning of the financial year.