Karur Vysya Bank Q2 FY27 Results Analysis: PAT Jumps 37%, NIM Beats Guidance (KARURVYSYA)

Karur Vysya Bank Ltd reported Q2 FY27 numbers with revenue of Rs. 3,670.21 Cr (+10.54% YoY) and PAT growth of +37.24% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Karur Vysya Bank delivered NIM of 4.50% versus its own FY27 guidance of 3.7–3.8%, with PAT up 37.24% YoY to Rs.787.69 cr and cost-to-income improving to 39.85% against a 45–50% target band. Advances grew 20.43% YoY versus industry ~19% while GNPA fell to 0.69%, and H1 PAT of Rs.1,543 cr already covers 61.5% of full FY26 PAT. The only soft spot is other income declining 15.13% YoY on a prior-year recovery base effect, while deposit growth (15.96%) trailing loan growth lifted the CD ratio to 86.6%.

Key Investment Insights

Key Positives

• NII grew 18.73% YoY to Rs.1,497.37 cr, outpacing interest expended growth of 12.36%
• NIM proxy expanded to 4.50%, above the FY27 guidance of 3.7–3.8% and up from 4.26% (ex-recovery) in Q1 FY27
• PAT grew 37.24% YoY to Rs.787.69 cr; H1 PAT of Rs.1,543.39 cr is 61.5% of full FY26 PAT of Rs.2,510 cr
• Cost-to-income improved to 39.85% from 42.63% YoY, inside the 45–50% target band
• GNPA fell to 0.69% (lowest in series) with NNPA at 0.18% and PCR at 96.13%
• Advances grew 20.43% YoY vs industry ~19%; deposits grew 15.96% YoY with borrowings down 7.74% YoY
• Provisions fell 56.80% YoY to Rs.118.53 cr; ROA at 2.10% annualized vs guidance of 1.7–1.8%
• H1 net CFO of Rs.3,075.36 cr vs Rs.175.33 cr in H1 FY26; free cash flow of Rs.2,999.10 cr

Risk Factors

• Other income declined 15.13% YoY to Rs.434.81 cr, a base effect from Q2 FY26 recoveries of Rs.139 cr interest recovery and Rs.205 cr other income
• Deposit growth of 15.96% YoY lagged advances growth of 20.43%, pushing the CD ratio from 83.4% to 86.6%
• Capital adequacy ratio declined to 17.97% from 18.61% in Q1 as advances growth outpaced capital accretion
• Effective tax rate rose to 24.53% from 22.75% a year ago
• Cost of funds is rising with deposit repricing; interest expended grew 6.85% QoQ