Dear Stakeholders,

It is my privilege to address you at an important milestone in Karur Vysya Bank’s journey, as we complete 110 years of service. Reaching this milestone reflects the strength of our business model, the trust placed in us by generations of customers, and the governance framework that has guided the Bank through changing economic cycles. Throughout our journey, the principles of prudence, accountability, transparency, and ethical conduct have remained central to our decision-making and continue to shape how we create value for all stakeholders.

As Chairperson, I take this opportunity to acknowledge the efforts of our leadership team and employees, whose dedication enabled the Bank to deliver with consistency in a dynamic operating environment. Their ability to serve customers with responsiveness, uphold internal discipline and support the Bank’s priorities has been central to the progress.

FY 2025-26 was also a year in which the Bank sustained its business momentum while remaining anchored in the principles that have shaped its long-standing character. Our performance was supported by focused execution across businesses, stronger customer engagement, improved operating effectiveness and disciplined risk practices.

Strong Performance amid Evolving Macroenvironment

FY 2025-26 was characterised by improving global economic conditions, with moderating inflation enabling several central banks to gradually shift their focus toward supporting growth. While geopolitical developments and evolving trade dynamics continued to shape global markets, economic activity remained supported by steady demand, expanding investment flows and improving business confidence.

India continued to distinguish itself as one of the world's fastest-growing major economies, recording real GDP growth of 7% and above in FY 2025-26. This performance was driven by strong domestic consumption, a revival in private sector capital expenditure, and supportive policy measures. Easing inflation, particularly in food prices, created room for monetary accommodation. Accordingly, the Reserve Bank of India undertook a cumulative cut of 125 basis points in the repo rate to 5.25% by December 2025 (Calendar Year) to support growth but maintained its policy stance in subsequent Monetary Policy Committee (MPC) meetings in view of the volatile external environment.

The banking sector benefited from this favourable backdrop. Karur Vysya Bank also delivered a strong performance in FY 2025-26, achieving our highest-ever earnings. Total Business grew by 15% Y-o-Y to ₹2,14,420 Crore from ₹1,86,569 Crore in FY 2024-25. Our strategy to accelerate credit growth during the first quarter also played a key role in business growth. Net Profit increased by 29% Y-o-Y to ₹2,510 Crore from ₹1,942 Crore. Return on Equity (ROE) improved from 16.28% to 17.79%, while Return on Assets (ROA) increased from 1.72% to 1.93%. The Bank continued to maintain strong asset quality, with Gross NPA (GNPA) at 0.75% and Net NPA (NNPA) at 0.19%, reflecting prudent risk management.

Strategic Focus Areas

We continued to advance our strategic priorities. Our lending strategy remained anchored in the Retail, Agriculture and MSME (RAM) segments, which accounted for 86% of total advances and continued to drive business expansion. We maintained a disciplined approach to portfolio growth, staying selective in segments facing heightened pricing competition.

We expanded our physical presence by surpassing the 900-branch milestone, enhancing our reach and strengthening our market presence. Our jewel loan portfolio remained a key growth driver, supported by strong demand. Conservative loan-to-value levels were maintained to ensure a balanced approach to growth and risk management. In parallel, we strengthened our liability franchise further by deepening transaction banking relationships and focusing on quality CASA acquisition. In corporate banking, we pursued opportunities selectively across sectors offering attractive risk-adjusted returns.

Digital Excellence

Digital transformation continued to strengthen our growth strategy during the year by enhancing customer experience, business banking capabilities, payments, security and internal efficiency. Our digital agenda spans retail, MSME and corporate customers, while also improving process agility across the organization. KVB DLite continued to support convenient digital banking for retail customers, while KVB Corp strengthened engagement with corporate and SME customers through a dedicated business banking platform. The Transaction Banking Group remained focused on delivering technology-enabled solutions for corporate and MSME customers, supporting relationships and improved service delivery. Alongside customer-facing platforms, we continued to digitise internal processes, strengthen digital transaction monitoring and improve turnaround times. These initiatives are helping us build a more secure, responsive and efficient banking ecosystem across customer segments.

Cybersecurity Commitment

Our expanding digital footprint is underpinned by a forward-looking cyber security framework. Continued focus and investment in the cyber security reflects the commitment on secure digital banking. Standards are being maintained with upgradation of ISO 27001 to latest 2022 standards. The Bank will be strictly aligned with the Government of India's Digital Personal Data Protection (DPDP) framework.

Robust Corporate Governance

Governance has been the foundation on which Karur Vysya Bank has grown over the years. I am happy to report that during FY 2025-26, we continued to build on it through an independent, diverse and engaged Board, supported by focused committee oversight and disciplined leadership planning.

During the year, Shri B Ramesh Babu has been re-appointed as Managing Director and Chief Executive Officer, extending his tenure until July 2028. I believe this provides stability to the Bank’s strategic direction while enabling the Board to plan the next phase of leadership transition in a structured manner. I also take the opportunity to welcome Dr. Mythili Vutukuru to the Board as an Independent Director. Her experience in technology and digital transformation adds valuable perspective at a time when these areas are becoming increasingly important to the Bank’s future. I am also happy to note the reappointment of CA Dr Chinnasamy Ganesan, whose continued presence brings valuable institutional knowledge and continuity to the Board. I place on record my sincere appreciation to our former Directors, Shri K G Mohan and Shri R Ramkumar, for their invaluable contributions in their respective field of expertise and who demitted office upon completion of their tenure since last Annual General Meeting.

The diversity and depth of our Board brings together strong experience across banking, finance, governance, regulation, technology audit, law, risk management and so on. Our diversified board strengthens the quality of discussion, oversight and decision-making. Our Board-level committees continued to provide focused oversight across areas such as audit, risk management, compliance, information technology, fraud monitoring, customer service, appointment related matters, CSR & ESG. Their guidance has helped us maintain discipline as we pursue growth, strengthen systems and respond to an evolving operating environment.

Shareholder Value

During FY 2025-26, with the approval of Shareholders, the Bank has allotted bonus shares in the ratio of (1:5) one Equity Share each for every five existing Equity Shares. Following the expansion of the equity base through the bonus issue, the Board of Directors has recommended a dividend of ₹2.60 per equity share of face value ₹2 each (130%) for the FY 2025–26, which reflects the Bank’s continued focus on sharing value with those who have supported our journey. For our shareholders, in particular, these actions represent both participation in the Bank’s progress and confidence in its long-term direction.

Our approach to shareholder value is supported by the Bank’s growing financial strength. Book value per share increased steadily to ₹145.95 as of 31st March 2026, which includes proposed dividend from ₹122.42 two years earlier. At the same time, our balance sheet remains adequately capitalized to support future growth, with our Basel III Capital Adequacy Ratio at 18.76%.

Credit Ratings

The Bank’s financial strength was validated by external ratings agencies, with ICRA reaffirming the Bank’s AA (Stable) Issuer Rating and A1+ rating for Certificate of Deposit, while CRISIL reaffirmed the A1+ rating for Certificate of Deposit. CARE also re-affirmed the A1+ rating for Short-Term Fixed Deposits and an AA (Stable) rating for Fixed Deposits. These ratings reflect confidence in the Bank’s capital position, liquidity and overall financial stability.

Risk Management and Regulatory Compliance

Our Enterprise Risk Management framework continues to evolve into a more data-driven model. This enables us to monitor risks more closely and respond with greater preparedness across key portfolios.

In the agriculture segment, we undertook enhanced monitoring of agri-jewel loans in view of rising gold prices and maintained a conservative loan-to-value ratio of 55.53% to mitigate market-related risks. The Bank also established a product-level concentration limit internally for gold loans to support portfolio diversification. In the investment portfolio, we selectively increased exposure to corporate bonds and State Development Loans that met our risk and return parameters.

To strengthen stressed asset resolution, dedicated teams were established for legal recovery, collateral possession and asset disposal, enabling faster resolution and value realization. In view of evolving external risks, a one-time prudential provision of ₹163 Crore was created to provide a buffer against potential geopolitical uncertainties and their impact on vulnerable sectors. Additionally, an incremental provision of ₹1.64 Crore was made towards compliance with new labour code requirements.

Shaping a Sustainable Future

During FY 2025-26, we strengthened our commitment to responsible and sustainable growth by embedding ESG considerations into our business strategy.

Our people remain at the center of our growth journey. We continued to invest in employee development through focused learning programs covering diversity and inclusion, ethics, employee well-being and leadership capabilities. Our CSR initiatives remained focused on creating sustainable community impact across key areas such as healthcare, education, skill development, rural development, financial literacy and social welfare. During the year, the Bank spent ₹40.65 Crore toward CSR initiatives, supporting improved healthcare access, nutritional assistance for school children, livelihood enhancement for underprivileged youth and women, financial awareness and holistic rural development through strategic partnerships.

The progress made in our sustainability journey was validated by the Bank’s improved CRISIL ESG score to 68 with a ‘Strong’ rating. This is a matter of institutional pride, as it reflects the growing depth of our ESG practices and reinforces our commitment to responsible, inclusive and sustainable value creation.

The Path Ahead

Looking ahead, we remain focused on strengthening our CASA franchise and retail deposits to support future credit expansion. We are confident of sustaining momentum across our RAM businesses, supported by a customer-centric approach and proactive customer engagement. At the same time, we continue to prioritize cybersecurity, risk management, operational resilience, and disciplined underwriting to preserve our strong asset quality. Backed by a robust capital position and an expanding branch network, we are well-positioned to deepen customer reach, drive sustainable growth and create long-term value for our stakeholders.

Gratitude Note

I take immense pride in the accomplishments that have been recognized through several prestigious awards and accolades, reflecting the dedication of our teams and the trust placed in us by our stakeholders. Together, we have successfully navigated challenges, seized emerging opportunities, and strengthened the foundation for sustainable growth in the years ahead.

I extend my sincere gratitude to our customers, shareholders, investors, business partners, employees, and all other stakeholders for their continued trust and support. I also acknowledge with appreciation the guidance and support extended by the Central and State Government Authorities, the Reserve Bank of India, SEBI, the Ministry of Corporate Affairs, Stock Exchanges, Depositories, and other regulatory bodies. My thanks also go to Mutual fund houses, foreign institutional investors, insurance companies, and corporate partners for their confidence in and association with the Bank.

Regards,

Dr Meena Hemchandra

Part-time Chairperson