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Informist, Wednesday, Jul. 23, 2025

By Pratiksha

NEW DELHI – Karur Vysya Bank's net profit is seen rising on year in the June quarter on the back of robust loan growth, according to brokerages tracking the lender. However, a contraction in net interest margin may eat into the lender's bottom line. The private-sector lender's net profit is expected to rise 7% on year to INR 4.91 billion in Apr-Jun. Sequentially, it is expected to decline 4.4%. 

The estimates for Karur Vysya Bank's net profit for the June quarter range from INR 4.69 billion to INR 5.09 billion. The Tamil Nadu-based bank's bottom line for the March quarter had risen 12.6% on year and 3.5% on quarter to INR 5.13 billion owing to a sharp drop in provisions.

The bank will detail its June quarter financial results on Thursday. Shares of the lender have risen almost 20% since it declared earnings for the March quarter on May 19. At 1026 IST, shares of the bank were trading 0.6% lower at INR 269.45 on the National Stock Exchange.

Karur Vysya Bank's advances rose 15% on year to INR 893.70 billion as of Jun. 30, according to provisional figures released by the bank. The bank had reported a 14% on-year growth in gross advances to INR 844.91 billion as of Mar. 31.

The bank's net interest income--the difference between interest earned and expended--is seen rising 6.6% on year to INR 10.92 billion in the quarter ended June, according to an average of estimates from the six brokerages. "NII (net interest income) growth will be slower than average loan growth due to fall in yield on advances outpacing cost of deposits. Consequently, NIM (net interest margin) will be lower sequentially," YES Securities said in a pre-earnings report.

Most brokerages expect the lender's net interest margin to contract in the latest quarter, primarily due to the Reserve Bank of India's Monetary Policy Committee cutting the repo rate by 100 basis points in 2025 so far. ICICI Securities expects the bank's net interest margin to fall to 3.83% in the June quarter from 4.05% in the March quarter and 4.13% a year ago. "We expect 8% year-on-year earnings growth as operating performance is slowing down. Slowdown is led by NIM (net interest margin) contraction (15 bps quarter-on-quarter factoring the recent reduction in policy rates)," Kotak Institutional Equities said in its pre-earnings report. 

ICICI Securities expects the lender's slippages to rise 20.7% on year and 17.3% on quarter in Apr-Jun to INR 2.10 billion, weighing on the bank's bottom line. In Jan-Mar, Karur Vysya Bank's slippages had declined 11% on year to INR 1.79 billion. "We expect an unchanged headline gross and net NPL (non-performing loan) ratio but slippages likely to be at around 1.4% (INR 3 billion) with no major concerns on commentary on asset quality," Kotak Securities said.

The management's commentary on strategy and guidance for growth and net interest margins in the next few quarters and asset quality trends will be watched, according to brokerages. Of the seven brokerages reports on the company available with Informist, six have a "buy" rating with an average target price of INR 279 per share. One brokerage has a 'sell' rating on the lender. 

Following are the Apr-Jun earnings estimates for Karur Vysya Bank based on reports from six brokerage firms in descending order by the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Deepshikha Bhardwaj

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