Highlights of the call:

On the back of 10% rise in interest earnings (Rs 1344.68 crore) and 12% rise in interest expenses (Rs 1003.80 crore), South Indian Bank (SIB) posted 4% increase in net interest income (NII) in quarter ended June 2014.

Net profit increased 10% to Rs 126.65 crore.

Last 5 year CAGR: 22% business; PAT CAGR of 21%; Improving asset yield as bank builds fee income streams in addition to interest income.

NIM which stood at 2.93% in June 2013 stood at 2.72% as on end of June 2014. In March 2014 quarter it was at 3.02%.

RoAA which stood at 0.94% in June 2013 stood at 0.93% as on end of June 2014. In March 2014 quarter it was at 1.00%.

C/I ratio which stood at 43.51 in June 2013 stood at 52.18 as on end of June 2014. In March 2014 quarter it was at 49.96.

According to the management the company is targeting growth with quality. It expects to get 35% of the business from wholesale banking; 30% from SME and 35% from retail by FY17.

NIM to be maintained in 3% range

The bank is working towards increasing the fee income to increase by 10%.

Also NNPA will be kept at under 1.0%.

The bank has strong distribution network. It plans 50 addition to offices, 250 ATM additions this year. It has Pan India presence in 27 states and 2 union territories.

It is the second largest player in Kerala among private banks

Cost/Income is expected to decline 1% per annum.

It has priority banking in 80 centers. It also has NRE banking to attract deposits.

Gross NPA stood at 1.57% in June 2014 quarter against 1.50% in June 2013 quarter and 1.19% in March 2014 quarter.

Net NPA stood at 1.12% in June 2014 quarter against 0.91% in June 2013 quarter and 0.78% in March 2014 quarter.

Provision Coverage stood at 57.95% in June 2014 quarter against 62.50% in June 2013 quarter and 62.71% in March 2014 quarter.

CASA grew from 8968 crore to Rs 10261 crore, up 14%. The bank targets 25% growth in CASA. Till now it has been growing 17-18% average.

CASA stood at 20.58% in June 2014 quarter against 22.07% in June 2013 quarter and 20.70% in March 2014 quarter.

CASA ratio is expected to increase 1% per annum.

Core deposits grew 21% to Rs 35970 crore.

Total deposited grew 7% to Rs 46489 crore.

Yield on advances stood at 12.05% in June 2014 quarter against 12.36% in June 2013 quarter and 12.37% in March 2014 quarter.

Cost of deposits stood at 8.04% in June 2014 quarter against 8.17% in June 2013 quarter and 8.13% in March 2014 quarter.

Composition of loan book- Retail stood at 30% in June 2014 quarter against 39% in June 2013 quarter. SME and Agri stood at 30% in June 2014 quarter against 28% in June 2013 quarter. Corporate stood at 40% in June 2014 quarter against 37% in June 2013 quarter.

Restructured asset portfolio stood at 1784.76 crore as on end of June 2014 quarter. Out of this 47% is in the power sector of state governments of UP, Rajasthan and one more state. Thus there is no rise to it. Also the situation for the power sector is improving.

Book value as of June 2014 stood at Rs 25.

Adjusted Book value as of June 2014 stood at Rs 21.4.

The bank has 668 branches in South India, 57 in West India, 49 in North India and 27 in east India.

Total ATM network stands at 1018 and total branch network stands at 801.

The bank plans to open 250 ATMs in FY 2015.

The Bank has a target of 1,00,000 crore of total business for FY 2015 and it is confident of achieving as planned.

The bank plans to raise equity by 20 crore shares. The bank is not desperate to raise equity as it is well capitalized as of now. But it feels that it is opportune time to raise money because of pick up in the economy. As and when it gets good price it will issue 20 crore shares.

All gold loans are for below 12 months.

The bank plans to grow 15% in FY 2015 and it sees retail as the primary driver of growth. There will be de-emphasis on chunky corporate loans. That is it will not take large exposure in an individual corporate account.