Karur Vysya Bank shares rise as Q1 advances, deposits jump 15% each

Shares of Karur Vysya Bank Ltd rose 4 per cent in Tuesday's trade after the private lender said its total deposits jumped 15 per cent to Rs 89,370 crore for the June quarter from Rs 77,710 crore in the same quarter last year. Deposits for the quarter grew 15.49 per cent to Rs 1,06,650 crore from Rs 92,349 crore in the corresponding quarter last year. 

On a sequential basis, advances were up 5.77 per cent over Rs 84,491 crore in the March quarter. Deposits were 4.88 per cent over Rs 1,02,078 crore QoQ. 

Karur Vysya Bank said its total business grew 15.27 per cent at Rs 1,96,020 crore against Rs 1,70,059 crore YoY. CASA came in at Rs 29,306 crore, up 4.51 per cent over Rs 28,042 crore YoY.

The stock jumped 3.69 per cent to hit a high of Rs 277.55 apiece. Later, it was trading at Rs 274.40, up 2.52 per cent.

The day also saw Karur Vysya Bank (KVB) and Kshema General Insurance announcing a strategic bancassurance alliance to offer a dual-benefit insurance product—Kshema Kisan Sathi—to India’s rural and agri-focused communities. 

Banking sector review
IIFL Securities in a banking preview note said lender's June quarter profit after tax may stay under pressure, declining 2 per cent year-on-year and 4 per cent quarter-on-quarter, weighed down by muted loan growth, NIM compression, seasonally weak fee income, and higher slippages.

Business momentum remains tepid, with system-wide loan and deposit growth largely flat on a sequential basis, it said. 

"Based on our loan re-pricing analysis, we expect loan yields to decline by 10–20 basis points (bps) quarter-on-quarter. This yield compression is likely to outweigh the impact of savings account (SA) rate cuts of 20–350 bps, peak term deposit (TD) rate cuts of 20–100 bps, and a 100bps reduction in bulk deposit rates, resulting in net interest margin (NIM) contraction of 8–25 bps," it said.