Karur Vysya earnings rose 37.2% year over year to INR787.69 crore in the quarter ended September 30, 2026, as stronger net interest income and lower provisions lifted profitability. The bank approved its second-quarter FY2026–27 results on October 15, with advances growing faster than deposits and bad-loan ratios improving.
Key Takeaways
- Net profit grew faster than operating profit, helped by a sharp reduction in provisions.
- Advances increased 20.4% year over year, exceeding deposit growth of 16.0%.
- Bad-loan ratios improved, although gross non-performing loans increased in absolute terms from a year earlier.
Table of Contents
- Karur Vysya earnings benefit from lower provisions
- Loan growth exceeds deposit expansion
- Lower bad-loan ratios mask an annual increase in balances
- Conclusion
Karur Vysya earnings benefit from lower provisions
The bank’s September 2026 quarterly financial results showed net profit rising from INR573.96 crore a year earlier and INR755.70 crore in the preceding quarter. The results were unaudited and subject to a limited review by the bank’s statutory auditors, who issued an unmodified conclusion.
Net interest income, calculated as interest earned less interest expended, increased 18.7% year over year to INR1,497.37 crore. Total income rose 10.5% to INR3,670.21 crore, despite other income falling to INR434.81 crore from INR512.32 crore.
Operating profit before provisions and contingencies increased 14.2% to INR1,162.20 crore. Provisions and contingencies excluding tax fell to INR118.53 crore from INR274.37 crore, helping explain why bottom-line growth substantially exceeded operating-profit growth.
| Item | Details |
|---|---|
| Basic earnings per share | INR8.15 for Q2 FY2026–27 versus INR5.94 a year earlier; not annualized. |
| Annualized return on assets | 2.10% for the quarter versus 1.81% a year earlier. |
| Half-year net profit | INR1,543.39 crore versus INR1,095.41 crore in the six months ended September 2025. |
| Total assets | INR150,830.72 crore at September 30, 2026, versus INR130,099.03 crore a year earlier. |
Loan growth exceeds deposit expansion
Advances reached INR111,015.22 crore at September 30, compared with INR92,184.86 crore a year earlier. Deposits increased to INR128,123.29 crore from INR110,491.64 crore over the same period.
The difference means the loan book expanded faster than its deposit funding base. Compared with March 31, 2026, advances grew 13.1%, while deposits increased 10.8%. These balance-sheet figures establish the pace of expansion, rather than a management forecast for future growth.
Lower bad-loan ratios mask an annual increase in balances
The gross non-performing asset ratio declined to 0.69%, from 0.76% a year earlier and 0.74% in June 2026. The net non-performing asset ratio was 0.18%, compared with 0.19% in both comparison periods.
In absolute terms, however, gross non-performing assets stood at INR765.44 crore, above INR707.83 crore a year earlier, though below INR771.89 crore in June. The annual comparison illustrates why a falling bad-loan ratio does not necessarily mean the outstanding amount of problem loans has declined.
The Basel III capital adequacy ratio was 17.97%, down from 18.61% in June but above 16.58% a year earlier. The bank also created a floating provision of INR25 crore during the quarter, which it included in Tier II capital.
Conclusion
The September quarter combined stronger interest earnings with a lower provision charge. The next quarterly comparison will test whether operating-profit growth keeps pace with the expanding loan book and whether absolute bad-loan balances decline alongside their ratios.
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