Karur Vysya Bank expects business to grow in FY18

Plans to raise over Rs 760 cr through rights issue

Karur-based private lender Karur Vysya Bank is expecting the business to grow better in the current financial year compared to the previous year, as the market is improving this year, said senior management official. The company is raising around Rs 760 crore through rights issue to support the expected growth.
 

"If the economy picks up, which we are seeing and we are also expecting it to go up, naturally that will have an impact, we thought we will raise the capital now," said K Venkataraman, managing director and chief executive officer of the bank.

The bank expects total business to improve at least by 12-15 per cent during the current financial year.

The bank has seen the consumption picking up last year, which was subdued by demonetisation for almost five months. The demand has again started picking up and the utilisations have been moving up during the period from March this year. Considering that the first two quarters are generally a little slow, it is expecting the real growth to start from the third quarter of this year.

"The indications are that it is better than last year and with this kind of a trend coming in, most probably from the third quarter onwards, the economic pick up should happen. The government has also stated that they will increase the public spending," Venkataraman said.

The last time it raised capital was almost two-and-a-half years ago when it raised Rs 625 crore through QIP.

It is focusing on small and medium enterprises (SME) and retail segments in its business. It has a corporate book of around 32 per cent, a commercial book, including SMEs of around 35 per cent and retail of 16 per cent. Exposure to agriculture is around 17 per cent. While SME is expected to pick up growth, in the real estate segment, the growth has not been picked up so far, he said.

The bank's total income posted Rs 6,404.57 crore during the year ended March 31, 2017, as compared to Rs 6,150.21 crore during the previous year. The net profit stood at Rs 605.98 crore during the financial year 2016-17 as compared to Rs 567.63 crore during the previous year.

The NPA levels grew a little due to the exposure into consortium projects, which it is trying to recover now. Gross NPA during the last quarter was 3.58 as against 1.3 per cent during the same quarter of previous year and the net NPA grew to 2.53 per cent of gross advances as against 0.55 per cent during the same quarter of the previous financial year. The slippage has grown against the bank's estimations, because of the larger accounts where the decisions were not taken in time.