Private sector lender Karur Vysya Bank said it will be focusing on commercial, retail and agriculture sectors followed by corporate banking to register over 14% credit growth for FY24.
“Housing loans, loan against property (LAP) and personal non- agri jewel loans will be major segments in retail while agri gold loans’ momentum will also continue,” the bank’s MD and CEO Ramesh Babu told mediapersons.
In FY23, commercial sector accounted for 33% of the total advances while retail was 23%, agri 23% and corporate 21%.
On the agri side, the Karur Vysya Bank (KVB) plans to partner with fintech firms to help dairy farmers. Talks are on to tie up with microfinance institutions to aid self-help and joint lending groups, initially in four districts in next three months.
The bank will be focusing on CASA acquisition, corporate salary accounts, government business and marketing of third party products on the liability side.
KVB has created a new structure called consumer banking department and experienced senior-level officials have been hired. “Hiring is still under process. Out of around 1,300 planned, 500 already in place and the remaining 800 are being recruited,” he said.
Babu said better underwriting, customer engagement, monitoring and collection processes resulted in sustaining asset quality. Going forward, the slippages estimated to be at 1% of the book.
Recoveries from written off accounts expected to ensure net slippages are negative during FY 24, he said. The restructuring portfolio likely to perform well and it has been adequately provided. Residual stress in restructured portfolio and SMA 2 book is comfortable, he added.
On net interest margin (NIM), Babu said he expexts an increase in the cost of deposits by 40 to 50 basis points in next two quarters. “As transmission of rates to advances customers already done, yield on advances unlikely to go up in tandem with cost of deposits. Compression in NIM expected and likely to be 4% plus till September 2023,” he said.
According to him, the cost to income may go up due to new planned recruitments.
“ CASA ratio will remain in the range 45-50%. We have a strong capital (CRAR) at 18.56%,” he said.
Briefing on the Q4FY23 performance, Babu said growth, asset quality and performance – all three parameters were in tune with its guidance. The bank had clocked a profit of Rs 338 crore and a healthy loan growth of 16%.
On guidance for FY24, he said the bank is looking to achieve a credit growth of 14% plus and deposits growth of the same level. “ The NIM will be at 4% plus for the first two quarters and credit costs to be around 0.75%. The GNPA may be be less than 2% and the NNPA is likely at less than 1%,” he said.
KVB’s total business stood at Rs 1,40,806 crore as on March 31, 2023 with a deposit base of Rs 76,638 crore and advances of Rs 64,168 crore. The bank posted the highest first ever four-digit net profit of Rs 1,106.09 crore during the last financial year.