B Ramesh Babu, the Managing Director and CEO of Karur Vysya Bank aims to increase the share of the commercial space in the overall loan book to 33%.

"Our intention is to have a 33% book in the commercial space where the yields are good. Agriculture as well as retail, we want to retain around 20-22%, and the balanced portion of 20-21% will be corporate," he said in an interview with CNBC-TV18.

To support the loan targets, Karur Vysya Bank is targeting loan growth of more than 15% for the current year.

However, there are challenges on the horizon, particularly concerning NIMs. The bank is currently experiencing pressure on its NIMs due to the increased cost of deposits. Despite setting a guidance of around 4% for the second quarter, the bank is currently ahead of this target.

Babu, however, remains optimistic that at the exit quarter of this year, the NIM will be around 3.8%. He said the NIM pressure is not a cause for concern, as the bank is working to compensate for the shortfall in NIMs through other assets.

Karur Vysya Bank's Return on Assets (RoA) was at a decade-high of 1.57% for the current quarter and Babu expects this strong performance to continue, with a projected RoA of 1.6% for FY24 at the exit quarter.

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The bank reported substantial year-on-year growth in its key financial metrics in the September quarter as per its latest business update. Total business stood at Rs 1,53,514 crore, marking a 14.15% growth compared to the same period in the previous year. Total deposits also surged to Rs 83,068 crore, reflecting a 13.17% growth year-on-year.

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(Edited by : Shweta Mungre)