South
Indian Bank conducted a conference call on 21 July 2023 to discuss its
financial results for the quarter ended June 2023. Murali Ramakrishnan,
MD&CEO of the bank addressed the call:
Highlights:
The bank has improved net
interest margin by 60 bps to 3.34% in Q1FY2024.
The provision coverage ratio
has improved by 643 bps yoy to 76.54% end June 2023.
The bank has reduced gross NPA
ratio by 74 bps to 5.87% and net NPA by 102 bps to 1.85% end June 2023 over end
June 2022.
The bank as also improved RoA
to 0.73% and RoE to 11.8% in Q1FY24.
The bank has reduced SMA 2
loan book by 19% to Rs 888 crore end June 2023.
The grass NPA on the new
loan book built from October 2020 stands at 0.16% and the SMA 2 loan book stands
at 0.23% end June 2023.
The security receipt book
stands at Rs 1378 crore with the provisions of Rs 1223 crore end June 2023. Thus
the net security receipt book is at Rs 155 crore end June 2023.
The business of the bank has
increased by 11% to Rs 1.69 lakh crore driven by 15% growth in the advances. The
disbursements were at Rs 22108 of which corporate disbursements were at Rs 17000
crore, gold loans at 883 crore, business banking at Rs 997 crore and other
retails at Rs 1028 crore.
The share of A+ rates corporate
loan book in the new loan book has expanded to 96% from 91% last year.
The gold loan book has
expanded by 21% to Rs 14478 end June 2023 with the LTV ratio of 83% and the
ticket size of Rs 1.6 lakh.
The personal loan book of
the bank has reached Rs 1935 crore up 93% yoy end June 2023
The bank has issued 2.51
lakh cards with the outstanding exposure of 955 crore end June 2023.
The core deposits of the
bank have increased by 9%. The NRI deposit stood at Rs 28382 crore accounting
for 30% of the total deposits The NRI remittance business of the bank has increased
by 8%.
The fresh slippages student
Rs 468 crore of which Rs 52 crore came from agriculture, Rs 266 crore from
business loans, Rs 96 crore from personal segment and Rs 53 crore from
corporate.
The restricted loan book of
the bank declined to Rs 1297 crore end June 2023 from Rs 2198 crore end June
2022, of which business segment accounted for Rs 748 crore, personal Rs 225
crore, corporate Rs 297 crore and Agriculture Rs 27 crore. The provisions on the
restructured loan book stands at Rs 493 crore end June 2023.
The provisions were higher in
Q1FY2024 on account of maintaining higher provision coverage ratio and 100%
provisions in the credit card book.
The bank expects to maintain
the strong growth momentum in the disbursements going forward.
The bank is targeting for
improvement in net interest margin to 3.5% for FY2024. Recoveries of some
accounts and interesting income recognition in expected to contribute to margin
improvement.
Bank also aims to improve
return on asset to 1% by March 2024.
The provisions for credit
card book were Rs 38 crore in Q1FY2024.
The bank expects fresh
slippage ratio at 1.8-1.9% and keep fresh slippages below Rs 1500 crore in
FY2024. The fresh slippages were elevated in Q1FY2024, while the bank expects
the slippages to moderate going forward.
The bank aims to reduce
gross NPA ratio to 4.5% and the net NPA ratio to 1% by March 2024.
The bank has sent two names for
the position of MD to the RBI for approval which is expected to be received by
mid August 2023.
The bank is targeting loan
of 13% for FY2024 at 2 times of GDP growth.
The provision coverage ratio
excluding write off stands at 65% and the bank aims to raise it to 75% by March
2024.
The bank expects credit cost
at 1 to 1.1% for FY2024.
The bank is targeting recoveries
and upgradations of Rs 1800 crore for FY 2024.
The bank is targeting net
profit of Rs 1000 crore for FY2024.
|