Karur Vysya Bank conducted a concall on 22 January 2024 to discuss the financial results for the quarter ended December 2023 and prospects of the bank. B Ramesh Babu, MD&CEO of the bank addressed the call:

Highlights:

The performance of the bank in terms of the earnings, growth and asset quality has been consistently improving over last 13 quarters.

The focus of the bank is on granularising the book and sustaining the growth.

The bank focused on reducing the low yielding advances has led to subdued growth in the corporate loan book.

The loan growth is targeted to be above 14% for FY2014.

The focus of the bank is on deposits and it has taken various steps to support the growth. The bank aims to maintain its deposit growth in tune with its loan growth.

Credit deposit ratio stands at 85% and the bank would maintain it at the existing level.

The bank had guided to maintain the net interest margin above 3.8%, while the net interest margin has improved by 25 bps qoq to 4.32% in Q3FY2024 of which 19 bps was on account of interest recovery in one account. The bank expects to maintain the net interest margin at around 4% in Q4FY2024.

The cost of deposits is expected to increase at a moderated pace 15 bps in Q4FY2024 assuming no change in the deposit rates.

The yield on advances are expected to increase by 10 bps in Q4FY2024 as the bank has raised its lending twice

The yield on investment is expected to rise by the similar quantum in Q4 compared to Q3FY2024.

The bank expects maintain return on asset (RoA) of 1.6% for FY2024.

The fresh slippages of loans stood at Rs 197 crore at 0.65% for 9MFY2024. The bank expects to maintain fresh slippage ratio below 1% for FY2024.

The bank is focusing on recoveries in written off accounts achieving at Rs 65 crore in Q3 and Rs 218 crore in 9MFY2024 which is equal to recoveries in full FY23.

The bank expects to maintain the credit cost at around 75 bps in FY2024.

Gross NPA ratio has declined to 1.58% and the bank expect to continue to maintain GNPA ratio below 2%.

During the quarter, the bank has continued to create floating provisions of Rs 25 crore per quarter for last 3 straight quarters to meet any emergencies including ECL provisioning requirement.

The restructured loan book of the bank has a reduced to 1.09% and the bank is holding 28% provisions.

The bank has raised provisions for the wage Hike to 17% from 15% with the additional provisions of Rs 7 crore in Q3. With regard to pension provisions, the bank had provided Rs 33 crore in Q2 and provided additional Rs 41 crore in Q3, while balance Rs 40 crore would be provided in Q4.

The bank expect its employee cost at Rs 325 crore per quarter from Q1FY2025. The bank aims to maintain its cost to Income ratio at 45 to 50% for FY2024.

The bank has exposure of Rs 10.86 crore in AIF, but the bank does not have exposures to AIFs which has done stream investments.

The bank has added 32 branches in 9 months and another 8 branches would be added in Q4. The bank has a network of 831 branches and December 2023.