V. G. Mathew, Managing Director & CEO of the Bank addressed the call.

Highlights of the call:

South Indian Bank registered an 11% rise in Interest income to Rs 1653.91 crore in the quarter ended June 2018.

13% rise in interest expenses to Rs 1159.65 crore saw net interest income (NII) rise 7% to Rs 494.25 crore.

Other income fell 33% to Rs 145.90 crore, which took net total income down 6% to Rs 640.15 crore. Operating expenses grew 23% to Rs 370.51 crore, after which OP fell 29% to Rs 269.64 crore.

Provision and contingencies grew 3% to Rs 231.53 crore after which PBT fell 75% to Rs 38.11 crore.

As tax expenses fell 72% to Rs 15.07 crore, net profit rose 77% to Rs 23.04 crore.

The reason for the decline in profit was the reduction in the Treasury trading profit by Rs 73 crore and incremental MTM (mark to market) provision in the Treasury Book by Rs 41 crore owing to adverse market conditions. Also there was incremental one-time employee cost of Rs 33 crore because of increase in gratuity ceiling and wage revision.

But for these, the net profit would have been Rs 119 crore for June 2018 quarter.

The non-resident CASA saw a growth of 5 per cent on a quarter-to-quarter basis.

The bank is continuing its focus on retail and MSME advances. Retail advance grew by 27% and MSME advance was up by 21% to Rs 13137 crore.

The bank is also vigorously pursuing the asset quality issues pertaining to corporate sector. As a result of this, the gross and net NPA levels have shown an increase by 93 bps and 73 bps respectively.

Sequentially the bank's low cost deposit has grown by 4% in Q1.

The overall business performance is in line with the guidance with a clear shift of focus to retail, MSME and agriculture.

Retail, SME & Agriculture Business grew 23% to Rs 37478 crore.

The gross business increased by Rs 15,689 crore to Rs 1,28,652 crore.

Deposits increased by Rs 6,697 crore to Rs 72,488 crore.

CASA increased 8% to Rs 17,883 crore.

Advances increased by Rs 9,172 crore to Rs 56,164 crore.

 The Capital Adequacy Ratio stands at 12.23% as on June 30.

 After adjusting PBT for one-offs, it would still have been lower by 40.6% at Rs 92 crore.

 Net Interest Margin at 2.6% is the lowest for the bank in 12 qtrs

Investment book stood at Rs 18879 crore.

NPA slippages increased due to increase corporate slippages and MSME slippages. Slippage from the corporate sector was Rs 308 crore and others were Rs 298 crore (Out of the others, MSME was Rs 226, Agri was Rs 11 crore and other retail put together was 61 crore).

Recovery target is Rs 500 crore in the next 3 months. So there will be significant NPA reduction by the end of the year.

The bank is on target of 1% credit cost target.

Slippages to be Rs 600-700 crore going forward in the next 3 quarters.

Provision Coverage Ratio stood at 39.1%.

Bad loans rise due to cash flow issues amongst SME customers on account of GST.

The bank saw highest loan growth in 8 qtrs at 18.8%.