Karur Vysya Bank Q2 result, Profit declines 11%

Karur Vysya Bank Limited (KVB) saw second quarter profit fall 11.2% to Rs 126.31 crore from last year as expenses at the private lender rose.

Despite the bank's total income increasing 2.6% to Rs 1,611 crore, expenses shot up by 6.3% to Rs 1,291.3 crore. Karur Vysya saw its bad loans increase for the second quarter, but set aside less money to cover its losses.

Gross non-performing assets (NPAs) as a percentage of advances rose to 2.29% from 1.79%; and the bank decreased its Q2 provision against loan losses 5.4% to Rs 119.2 crore from Rs 126 crore in the year-ago.

The bank's Basel II capital adequacy ratio (CAR) also reduced to 11.48% from 13.10% last year. Return on assets - which indicates a bank's profitability measured against its assets - fell to 0.86% from 1.03%.In its financial statement, Karur Vysya said it has made provisions for Rs 35.52 crore; which is 15% of the food credit availed by the state government of Punjab on March 31, 2016. During the half year, excess provision of Rs 9.43 crore was written back.

Securities amounting to Rs 106.76 crore were shifted to held for maturity (HTM) category from available for sale (AFS). And Rs 406.31 crore was shifted to AFS from HTM, resulting in a depreciation of Rs 0.93 crore.

The bank also sold bad loans to asset recovery companies of which Rs 126.38 crore was charged for this fiscal; amounting to Rs 63.19 crore for the current quarter. The balance carried over was Rs 311.45 crore, said the bank.

Karur Vysya also set aside Rs 41.83 crore to cover frauds this fiscal; amounting to Rs 15.55 crore for the current quarter).