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Informist, Thursday, Jan. 16, 2025

By Pratiksha

NEW DELHI – Karur Vysya Bank Ltd.'s net profit is seen rising 10.2% on year to INR 4.53 billion for the quarter ended December owing to steady loan growth and stable asset quality, according to an average of estimates of five brokerages. The bank reported a net profit of INR 4.12 billion a year ago and INR 4.74 billion in the previous quarter. 

The estimates for net profit of the bank in Oct-Dec range from INR 4.29 billion to INR 4.90 billion. Karur Vysya Bank is scheduled to announce its earnings for the December quarter on Monday.

The Tamil Nadu-based bank's total advances were up 14% on year at INR 828.42 billion as of Dec. 31, as per provisional figures released by the bank on Jan. 1. "We expect an unchanged headline gross and net NPL (non-performing loan) ratio, but slippages are likely to be at around 1.3% (INR 2.5 billion), with no major concerns on commentary on asset quality," Kotak Institutional Equities said in a pre-earnings report. In terms of asset quality, the bank's gross non-performing asset ratio declined to 1.10% as of Sept. 30, from 1.32% at the end of June, while the net non-performing asset ratio fell to 0.28% from 0.38% as of Jun. 30.

The bank's net interest income is seen rising 7.9% on year to INR 10.80 billion in the quarter ended December, according to an average of estimates of the five brokerages. "NII (net interest income) growth will be slightly slower than average loan growth due to rise in cost of deposits outpacing yield on advances. Consequently, NIM (net interest margin) will be slightly lower sequentially," YES Securities said in a pre-earnings report. 

Most brokerages expect the private bank's net interest margin to decline in Oct-Dec. Kotak Institutional Equities expects the bank's net interest margin to fall to 3.7% as of Dec. 31 from 4.11% in the September quarter. "We believe margins could slip a bit, but the bank should be able to deliver 1.6-1.7% RoA (return on assets), while slippages could remain range bound." Emkay Global Financial Services said in its pre-earnings report.

YES Securities expects the lender's slippages and provisions to be broadly stable on a sequential basis. The bank's provisions and contingencies rose 42.3% on year to INR 1.80 billion in Jul-Sept. The management's commentary on the return on equity trajectory, asset quality trends, and continued business momentum will be watched out, Elara Securities said in its pre-earnings report.  

On Thursday, shares of Karur Vysya Bank closed 3.9% higher at INR 220.74 on the National Stock Exchange of India Ltd. Following are the Oct-Dec earnings estimates for Karur Vysya Bank based on reports from five brokerage firms in descending order by the estimate of net profit:

End

Edited by Deepshikha Bhardwaj

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