Karur Vysya Bank's biz likely to go up 25%

Karur Vysya Bank (KVB), a private scheduled commercial bank, is expecting a 25 per cent increase in its business volumes to Rs 11,500 crore this fiscal. The bank had crossed the Rs 10,000-crore mark in business volumes for the financial year ended on March 31, 2004.

Addressing a press conference to launch the bank's Founders' Day celebrations, P T Kuppuswamy, chairman of Karur Vysya Bank, said: "Andhra Pradesh contributed Rs 2,100 crore, or over 20 per cent, of KVB's total business of Rs 10,000 crore in 2003-04."

"The bank which has its divisional office at Vijayawada, is planning to open a second divisional office at Hyderabad," he added.

The bank's net profit increased 28.87 per cent to Rs 161.05 crore as compared to Rs 124.97 crore it achieved the previous fiscal. The bank has announced a dividend of 100 per cent for the year as compared to 70 per cent announced the previous year.

The bank has brought down its gross non-performing assets (NPAs) to 5.83 per cent from 7.46 per cent and net NPAs to 2.32 per cent from 4.2 per cent during last fiscal. It now expects to attain zero NPA level in the next two years.

The banks has earmarked around Rs 60 crore towards technological solutions across all its delivery channels.

"Out of the total allocation the bank has already spent around Rs 40 crore on technology initiatives that include implementing core-banking solution and real time gross settlement (RTGS) for inter-bank and intra-bank transactions," Kuppuswamy said.

The bank plans to invest the balance Rs 20 crore during the current financial year. KVB plans to install 70 additional automated teller machines (ATMs) taking the total network to 180. The bank has already tied up with UTI Bank for sharing the latter's 1,400 ATMs.

The bank is at present negotiating with a couple of banks for entering into similar arrangements. According to Kuppuswamy, the new alliances would enable the KVB customers to have access to more than 3,000 ATMs.

The bank is also planning to open 15 more branches during the current fiscal. At present KVB has 225 branches across the country of which 183 are in semi-urban and urban and the balance in rural areas.

Kuppuswamy said that the bank has already implemented core-banking solution in 99 branches and the new branch, which was being inaugurated on Monday at Nizamabad, would be the 100th branch to have the core-banking solution.

Kuppuswamy said that the retail segment at present contributes around 30 per cent to the total revenues, while the balance comes from corporate segment. The bank proposes to improve its retail business to 40 per cent of revenues.

"The agriculture lending for the year was around 14 per cent and this year we plan to increase it to around 18 per cent in accordance with the Reserve Bank of India norms. We are also looking at the option of having rural branches of the bank dedicated towards the agricultural sector," Kuppuswamy said.

Athi S Janarthanan, the grandson of the bank's co-founder, Athi Krishna Chettiar and director of the bank said, "The bank's core promoters and their associates have a 15 per cent stake out of the 35,000 shareholders of the bank."

The bank has already entered into alliances with Birla Sun Life Mutual Fund, Birla Sun Life Insurance, Bajaj Allianz General Insurance and Export Credit Guarantee Corporation (ECGC) to sell their mutual fund and insurance products.

Apart from taking steps to improving volumes through the current alliances, KVB is also looking at fresh arrangements for vending financial products.