Karur Vysya Bank Q3 Results Review - Higher Write-Offs Led To Multi-Quarter Low NNPL: ICICI Securities

ICICI Securities Report

Karur Vysya Bank Ltd.’s Q3 FY23 financial performance was characterised by its aggressive approach in cleaning up the balance sheet (written-off loans amounting to Rs 7.5 billion) and sustained improvement in core operating performance. Return on asset at 1.3% during Q3 FY23 is ahead of guidance – earlier the management was expecting 1.2% RoA by Q4 FY23.

Lower tax (~10%) and higher recovery (of Rs 0.85 billion) from written-off accounts supported earnings. Net non-performing loan ratio settled at a multi-quarter low of 0.9% during Q3 FY23 versus management’s target of bringing it down to less than 1% by March 2023.

While Karur Vysya Bank wrote off loans amounting to Rs 7.5 billion during Q3 FY23, it continued to maintain a strong provision coverage ratio at 67%. This resulted in higher provisioning at Rs 3.6 billion (more than 2% credit cost).

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