Karur Vysya Bank: Retail Growth and Asset Quality Improvement Drive Q3 2025 Performance

Karur Vysya Bank (KVB), a leading private sector bank in South India, reported robust financial results for the quarter ended December 31, 2024, driven by strong retail growth and improved asset quality. The bank's shares surged 5% intraday on Monday, January 20, following the announcement of its Q3FY25 results.



Key Highlights of Q3FY25 Results:

1. Net Profit and Total Income Growth: KVB reported a 20.5% year-on-year (YoY) increase in net profit for the December quarter at ₹496.03 crore, compared to ₹411.63 crore in the same period last year. Total income rose 18.3% YoY to ₹2,953.44 crore for the October-December 2024 quarter, up from ₹2,497.17 crore in the corresponding quarter of FY24.
2. Interest Income and Operating Profit Growth: Interest income showed strong growth, climbing 16.02% YoY to ₹2,486.01 crore from ₹2,139.4 crore in the year-ago period. Operating profit (before provisions and contingencies) increased 20.6% YoY to ₹815.27 crore, compared to ₹675.9 crore in the same quarter last year.
3. Asset Quality Improvement: Gross non-performing assets (NPA) fell to 0.83% in Q3FY25, down from 1.58% in the year-ago period and 1.1% in the previous quarter. Similarly, net NPA decreased to 0.2%, compared to 0.42% last year and 0.28% in Q2FY25. The Provision Coverage Ratio (PCR) stood at 96.87% as of December 31, 2024, up from 94.81% in the corresponding period of the previous year.
4. Capital Adequacy and Liquidity: Capital Adequacy Ratio (CRAR) as per Basel III guidelines was at 15.91% as on December 31, 2024, compared to 15.39% as on December 31, 2023. The bank's liquidity coverage ratio (LCR) stood at 185.1% (weighted average for 3 months) as on June 30, 2024, indicating a strong liquidity position.

Retail Growth and Asset Quality Improvement Drive Performance:

KVB's strong quarterly performance was driven by robust growth in its retail, agriculture, and MSME (RAM) verticals, as well as improved asset quality. The bank's Managing Director & CEO, Mr. Ramesh Babu B, highlighted the bank's solid start in these segments at the beginning of the year and expressed confidence in maintaining the same trajectory going forward. The bank's focus on these segments has led to improved asset quality, with gross NPA and net NPA ratios decreasing significantly. Additionally, the bank has maintained a stable CASA ratio and a high proportion of retail deposits, ensuring a consistent and accessible source of funds for its lending activities.

Looking Ahead:

As KVB continues to focus on its retail, agriculture, and MSME verticals, the bank is well-positioned to maintain its strong performance and drive future growth. By expanding its reach beyond South India, diversifying its loan portfolio, and strengthening its risk management practices, KVB can mitigate risks associated with regional economic fluctuations and ensure long-term stability. With a strong liquidity position and comfortable capitalization metrics, the bank is well-equipped to navigate potential challenges and capitalize on growth opportunities in the Indian banking sector.