Dear Stakeholders,

It is a privilege to address you at the conclusion of my first full year as Executive Director of Karur Vysya Bank. The year was both professionally enriching and personally rewarding, providing an opportunity to work closely with our teams and contribute to the continued growth of an institution built on over a century of trust, prudence and customer focus. Throughout the year, my efforts were centred on advancing the Bank's strategic priorities through disciplined execution, customer-centricity, and sustainable growth.

We remain focused on strengthening our business franchise, enhancing operational effectiveness, and creating long-term value for all stakeholders. Alongside strong governance, sound risk management and institutional discipline, the Bank possesses a deep understanding of local markets and enduring customer relationships. Combining these strengths with agility, innovation and execution excellence positions us well to capitalise on emerging opportunities and drive the next phase of growth.

A Landmark Year

FY 2025-26 was a landmark year for the Bank, marked by strong growth across key business and financial parameters. Total business crossed ₹2,14,420 Crore, registering a growth of 15% Y-o-Y, driven by a 17% increase in advances to ₹98,754 Crore and a 13% growth in deposits to ₹1,15,666 Crore. The Bank delivered its highest-ever net profit of ₹2,510 Crore, representing a robust growth of 29% Y-o-Y. Profitability also improved significantly, with ROE rising to 17.79% from 16.28% and ROA improving to 1.93% from 1.72% in FY 2024-25.

Asset quality continued to be the best in the industry, with Gross NPA improving to 0.75% and Net NPA remaining at a low 0.19%. These outcomes reflect the quality of our franchise, the strength of our balance sheet, and our continued focus on building a high-performing and future-ready institution.

Empowering the SME Segment

One of my key priorities during the year was to strengthen our engagement with the SME segment. Small and medium enterprises remain central to India’s economic growth. They generate employment, support supply chains, drive local enterprise, and contribute meaningfully to national development. During FY 2025-26, our commercial advances portfolio grew by over 12%, reaching ₹34,279 Crore, supported by a highly granular portfolio structure and strong customer relationships.

We strengthened our position in this segment by combining our longstanding expertise in trade finance and relationship-led banking with technology-driven solutions. Through our Transaction Banking Group, we provide API-enabled capabilities that help businesses streamline trade finance and transaction banking processes. We also enhanced our lending framework through cash flow-based credit assessment, technology-enabled portfolio monitoring, and specialised training programs to strengthen credit evaluation and portfolio quality.

To improve customer experience and responsiveness, we refined existing products and introduced solutions tailored to the evolving requirements of MSMEs. A dedicated CRM platform now supports lead management, customer acquisition, and relationship tracking, while improved turnaround times and digital capabilities have enhanced access to banking services. Our KVB Corp platform further enables SME and business customers to manage banking transactions, loans, and statutory payments through a dedicated digital channel.

A key pillar of our MSME strategy is strengthening the Small Business Group (SBG) model. During the year, we expanded this specialised relationship-led approach across 79 high-potential branches, supported by a dedicated team of Relationship Managers focused on customer acquisition, quality portfolio growth, and deeper engagement with small businesses. The SBG model is designed not only to acquire new relationships but also to support customers through their growth journey. Relationship Managers work closely with businesses to facilitate quality disbursals, deepen engagement, and increase average ticket sizes before seamlessly transitioning relationships to local branches for long-term nurturing and service.

We appointed dedicated SBG Coordinators at Divisional Offices to provide specialized support to branches and improve responsiveness to customer requirements. We also conducted focused training programs aimed at enhancing product knowledge, account identification capabilities, and relationship management skills. We also continued to strengthen our lending framework by adopting a more cash flow-oriented approach to credit assessment, enabling us to better align financing solutions with the operating realities of businesses. We also refined our product suite through the introduction of new offerings and enhancements to existing products, ensuring that our solutions remain relevant to the evolving requirements of SME and MSME customers.

We were honoured with the MSME Bank of the Year – Private award at the 12th Global SME Excellence Awards 2025-26 and were also recognised as Runner-up for Best SME Lending. In addition, we received the Best Bank for Promoting Government Schemes award at the MSME Banking Excellence Awards 2025, reflecting our efforts to support entrepreneurship and financial inclusion.

Alongside our core MSME focus, we pursued opportunities in select high-potential segments such as commercial real estate and EPC financing, where we see attractive risk-adjusted growth opportunities. These efforts are supported by our expanding digital ecosystem, including strategic fintech partnerships and integration with the Unified Lending Interface (ULI), which enhance customer onboarding, streamline lending processes, and strengthen our ability to deliver technology-enabled credit solutions at scale.

Beyond banking, our community development initiatives reinforced our belief that sustainable growth is built on empowering communities and expanding access to economic opportunities. These initiatives supported women entrepreneurs in creating sustainable livelihoods and promoted financial awareness through 417 Financial Literacy Campaigns (FLC), impacting 5774 beneficiaries.

Looking Ahead

Our goal is to position KVB as a leader in the banking industry, recognised not just for its financial fortitude but for its contribution to societal development and customer satisfaction. We are building a bank that is agile enough to innovate and stable enough to endure. Our strategy is built on balancing growth with prudence, ensuring that we deliver consistent returns while upholding the trust placed in us.

I am grateful for the trust placed in us by our customers, the commitment shown by our employees, the guidance of our Board, and the continued confidence of our shareholders. Together, we are advancing an illustrious legacy while shaping a more inclusive, modern, and forward-looking institution for the future.

Regards,

B Sankar

Executive Director