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South Indian Bank recorded healthy 20% growth in the net profit to Rs 84.48 crore in the quarter ended September 2019 (Q2FY2020), driven by improved margins, strong growth in other income and consistent improvement in expense ratio. However, the provisions for bad loans were higher on account of elevated fresh slippages of loan in Q2FY2020.
The Net Interest Margins (NIMs) bank has improved to 2.69% in Q2FY2020 from 2.53% in Q1FY2020 and 2.61% Q2FY2019, supporting improved 15% growth in Net Interest Income (NII) of the bank for Q2FY2020.
The advances growth of the bank moderated to 11%, but the bank has exhibited healthy 19% growth in the focused retail, agriculture and MSME loan book. The bank has also improved CASA deposits ratio to 24.9% end September 2019. The fee income of the bank increased 7% in Q2FY2020.
Asset quality moderates slightly: Asset quality of the bank moderated slightly on account of higher slippages of loans in Q2FY2020.
- GNPA ratio of the bank was nearly stable at 4.92% and NNPA ratio stood at 3.48% end September 2019.
- Fresh slippages of advances were higher at to Rs 435 crore in Q2FY2020. The recoveries and upgradations stood at Rs 95 crore, while write-offs were heavy at Rs 351 crore in Q2FY2020.
- Fresh restructuring of loans stood at Rs 269 crore in Q2FY2020. The standard restructured advances book of the bank increased to Rs 489 crore at end September 2019 from Rs 278 crore end June 2019.
- Provision coverage ratio increased to 48.1% end September 2019.
| Asset Quality Indicators: South Indian Bank |
|
1909 |
1906 |
1903 |
1812 |
1809 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
3145.20 |
3154.22 |
3131.67 |
2930.00 |
2646.15 |
0 |
0 |
19 |
| Net NPA (Rs Crore) |
2193.15 |
2134.73 |
2163.62 |
2099.67 |
1784.72 |
3 |
1 |
23 |
| % Gross NPA |
4.92 |
4.96 |
4.92 |
4.88 |
4.61 |
-4 |
0 |
31 |
| % Net NPA |
3.48 |
3.41 |
3.45 |
3.54 |
3.16 |
7 |
3 |
32 |
| % PCR |
48.10 |
45.10 |
42.46 |
41.17 |
41.90 |
300 |
564 |
620 |
| % CRAR - Basel III |
12.08 |
12.17 |
12.61 |
11.81 |
12.11 |
-9 |
-53 |
-3 |
| % CRAR - Tier I - Basel III |
9.60 |
9.70 |
10.00 |
9.70 |
10.00 |
-10 |
-40 |
-40 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth slows marginally: Business growth of the bank moderated to 11% yoy at Rs 146867 crore at end September 2019. The moderation in business growth was driven by deceleration in advances growth to 11% yoy at Rs 63920 crore at end September 2019, while the deposits growth also eased to Rs 82947 crore at end September 2019.
Strong retail, agriculture, MSME loan book growth, corporate loan book declines: Gross advances book increased 11% yoy to Rs 63920 crore at end September 2019. The corporate book declined 2% to Rs 19697 crore, while its share in loan book declined to 31% end September 2019 from 35% end September 2018.
The retail loan book exhibited acceleration in loan growth to 20% to Rs 19284 crore, agriculture book moved up 20% to Rs 9431 crore and MSME loan book gained 16% to Rs 15508 crore end September 2019.
Within the retail book, the mortgages jumped 29% to Rs 4950 crore at end September 2019. Housing increased 25% to Rs 5075 crore, gold 49% to Rs 2231 crore and vehicle 24% to Rs 1090 crore at end September 2019.
CASA ratio improves: CASA deposits of the bank increased 12% at Rs 20614 crore gaining the share in overall deposits to 24.9% at end September 2019 compared to 24.1% a quarter ago.
Network expansion: Bank has network of 870 branches and 1395 ATMs at end September 2019.
Book Value per share stood at Rs 29.0 per share at end September 2019, while adjusted Book value (adjusting for NNPA and 10% of restructured advances) was at Rs 16.6 per share at end September 2019.
Quarterly Performance:
NII growth improves as NIMs rises: Bank has reported 15% growth in Net Interest Income (NII) at Rs 584.30 crore for the quarter ended September 2019. The interest earned increased 15% to Rs 1953.97 crore, while interest expended moved up 15% to Rs 1369.70 crore in the quarter ended September 2019.
Non-interest income jumps: The non-interest income of the bank increased 58% to Rs 249.21 crore in Q2FY2020, as the treasury income surged 538% to Rs 83 crore and other income moved up 34% to Rs 63 crore in Q2FY2020. Core fee income of the bank increased 7% to Rs 93 crore, while forex income declined 9% to Rs 10 crore in Q2FY2020.
Net total income increased 25% to Rs 833.51 crore in the quarter ended September 2019.
Expense ratio declines: The operating expenses of the bank increased 19% to Rs 422.06 crore in the quarter ended September 2019. Thus, the expense ratio dipped 274 bps yoy to 50.6% in the quarter ended September 2019, allowing operating profit to increase 33% to Rs 411.45 crore in Q2FY2020.
Provisions surge: The provisions and contingencies surged 50% to Rs 306.34 crore in the quarter under review. The provisions for NPA jumped to Rs 285 crore and standard assets Rs 12 crore, while bank has written back investment provisions of Rs 1 crore in Q2FY2020.
With the surge in provisions, PBT came in flat at Rs 105.11 crore in Q2FY2020.
The effective tax rate dipped to 19.6% in Q2FY2020 compared to 33.3% in Q2FY2019. Net Profit increased 20% to Rs 84.48 crore in the quarter ended September 2019.
Half Yearly Financial Performance:
For the half year ended September 2019 (H1FY2020), the bank posted 69% surge in the net profit at Rs 157.74 crore. The net interest income increased 12% to Rs 1119.96 crore, while non-interest income moved up 42% to Rs 431.12 crore in H1FY2020. The operating expenses increased 13% to Rs 822.00 crore, while provision and contingencies moved up 17% to Rs 511.35 crore in H1FY2020. The profit before tax jumped 52% to Rs 217.73 crore in H1FY2020. The expense ratio dipped 259 bps to 53.0% in H1FY2020 compared to 55.6% in H1FY2019. After considering 27.6% of effective tax rate, the net profit moved up 69% to Rs 157.74 crore in H1FY2020.
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