Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Search stocks
Karur Vysya Bank Ltd

| Q2 FY26 Earnings Conference Call

NEUTRAL SENTIMENT

Report Source

⬤17th Oct 25

Summary : Karur Vysya Bank reported strong Q2 FY26 growth in business, advances, and deposits, maintaining NIMs and asset quality despite competitive pressures and one-off corporate slippages, while remaining cautiously optimistic for H2.

Management Perspective positive : Management expressed pleasure at reaching INR2 lakh crores in business, stated confidence in maintaining momentum, and committed to strong future performance. They also noted current performance is consistent with guidance.

Concall Report Analysis & Insights

Business Overview

  1. Total business reached INR2,03,216 crores, growing 4% QoQ and 15% YoY.
  2. Advances and deposits both increased by 4% QoQ and 15% YoY.
  3. Net Interest Margin (NIM) maintained at 3.77%, a 9 basis point decrease QoQ.
  4. Operating profit grew 25% YoY and 26% QoQ to INR1,017 crores.
  5. Net profit was INR574 crores, up 10% QoQ and 17% YoY.
  6. Gross NPA slightly increased to 0.76%, while Net NPA remained steady at 0.19%.

Future Growth Prospects

  1. Maintains a cautiously optimistic outlook for the second half of FY'25/'26.
  2. Expects credit growth of approximately 2% above the industry average.
  3. Plans to open an additional 21 branches in the current financial year.
  4. Focusing on higher balance variants in savings accounts for momentum.
  5. Established a jewel loan sales team to further improve growth in this segment.

Management Insights

  1. "We continue to maintain a cautiously optimistic outlook for the second half of the financial year."
  2. "The bank has achieved a significant milestone of reaching INR2 lakh crores in business."
  3. "We endeavor to maintain our full year guidance of net interest margin at 3.7% to 3.75%."
  4. "We prefer to recognize stress now so that realization efforts can be commenced fast."
  5. "We are committed to upholding this trust through continued strong performance."

Signs of Skepticism

  1. Management attributed increased credit cost to a 'one-off call' for two corporate accounts, suggesting it's not a systemic issue.
  2. Claims US tariffs have a 'miniscule exposure' and 'negligible impact' on the portfolio, despite analyst concerns.
  3. Maintains full-year NIM guidance despite acknowledging competitive pressures and rate hikes.

Risk Factors

  1. Emphasizes the importance of managing margin pressures.
  2. Requires close monitoring of asset quality.
  3. Faces significant competition in the deposit and loan markets.
  4. RBI's shift in policy stance limited treasury gains in Q2.
  5. Vehicle loan segment carries higher risk and delinquency levels.

Good To Know

  1. Recovered INR295 crores from a technically written-off account during the quarter.
  2. Proactively recognized INR218 crores of fresh slippages from the corporate book.
  3. SMA 30-plus levels decreased to 0.27% from 0.6% in the previous quarter.
  4. Standard restructured loan portfolio reduced to 0.5% of total loans.
  5. Gold loan portfolio maintains LTV below 75% for all accounts.

Key Drivers

  1. Sustained growth in business, advances, deposits.
  2. Proactive recognition of corporate account stress.
  3. Strong capital adequacy and return on assets.
  4. Expansion with 21 new branches planned.

Key Analyst Discussions

Competitive Environment

  1. Management acknowledged facing significant competition, leading to foregoing some exposures at lower rates.
  2. Management discussed the impact of competition on deposit and advance rates.

Market Trends & Consumer Behavior

  1. Analyst asked about the potential impact of US tariffs on textile and MSME segment growth.
  2. Management explained how buyers and sellers are sharing the tariff burden to mitigate impact.
  3. Management noted a slight uptick in consumer loan segments due to pent-up demand.

Financial Highlights

  1. Analyst inquired about the recovery prospects of affected corporate accounts and full-year credit cost expectations.
  2. Analyst questioned the flat fee income QoQ and management's strategies to enhance it.
  3. Analyst asked if NIMs are expected to turn around in the coming months.
  4. Analyst requested a breakdown of the INR274 crores in provisions between loan loss and other categories.

Product Composition

  1. Analyst questioned gold loan growth and any product adjustments after RBI guidelines.
  2. Management confirmed no new gold loan products, maintaining existing rigor and controls.
  3. Management explained the strategy of prioritizing higher-yield, risk-mitigated products over others like vehicle loans.

Strategic Considerations

  1. Analyst asked if the INR218 crore corporate slippages were related to US tariffs.
  2. Management clarified these slippages were pre-existing pipeline issues, unrelated to US tariffs.
  3. Analyst inquired about the strategy of investing in corporate instruments as credit substitutes.
  4. Management stated this strategy helps lock in yields and protect against rate falls.
Karur Vysya Bank Ltd (KARURVYSYA) Concall Report Analysis & Insights | Dhanarthi