As the 110-year-old private sector lender Karur Vysya Bank posts an all-time high annual profit in FY26, the bank is optimistic of an 18 per cent growth in advances in FY27, the same as FY26, as it monitors the macroeconomic situation.
The bank is also cautious on its guidance for net interest margin (NIM) and return on assets due to uncertainties around interest rates, deposit costs and geopolitical risks.
NIM for Q4FY26 was 4.25 per cent, and we are guiding for a 3.7-3.8 per cent for FY27, Ramesh Babu B, Managing Director & CEO, Karur Vysya Bank, told businessline. “Likewise, our return on assets for the whole year is 1.93 per cent and we have given a guidance of 1.7- 1.8 per cent,” he added.
Advances growth was driven by jewel loans and loans against property, and the bank consciously avoided aggressive growth in low-yield products such as home and vehicle loans, Babu said. Gold loans grew at around 25 per cent year-on-year. Agriculture advances also grew over 19 per cent, with nearly 91 per cent of the agri portfolio comprising gold loans.
MSME credit
In case of MSME credit, the lender has adopted a cautious stance over the last two quarters due to uncertainty stemming from US tariffs and the West Asia conflict, particularly in export-linked sectors such as textiles. While the bank continued servicing genuine funding requirements, we slowed aggressive expansion in the segment until greater clarity emerges, Babu said.
The bank has estimated its direct exposure to customers exporting to West Asia in the Rs 50-100 crore range and has also created an overlay provision of ₹163 crore during Q4FY26 to account for possible fallout from the conflict.
However customer stress levels have remained low, Babu said, adding that many borrowers have reduced working capital utilization to cut interest costs amid slowing order flows.
KVB also said it had already built contingency provisions that could help absorb the impact of the proposed expected credit loss (ECL) framework that kicks in from April 1, 2027. In addition to the war-related provisioning, we have set aside around ₹200 crore over the last two years toward contingencies that could be utilised for ECL requirements, Babu added.
Amid rising focus on AI-related cybersecurity threats, the lender said it has strengthened safeguards and engaged third-party experts to review its systems.
Published on May 8, 2026