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South Indian Bank has posted 11% growth in the net profit to Rs 81.65 crore in the quarter ended June 2020 (Q1FY2021), driven stable margins and strong growth in the non-interest income. The bank has improved cost-to-income ratio to 53.7% helping to post healthy 27% growth in the operating profit for Q1FY2021. The bank has continued to make higher provisions leading to surge in provision coverage ratio to 58.8% end June 2020, while maintaining stable asset quality.
The bank has posted 10% growth in the net interest income, while treasury income jumped supporting 22% surge in the net total income in Q1FY2020. The Net Interest Margins (NIMs) of the bank eased marginally from previous quarter, while improved to 2.62% in Q1FY2021 from 2.53% in Q1FY2020.
The advances growth of the bank was steady on sequential basis at 3%, but the bank has exhibited healthy 10% growth in the focused retail, agriculture and MSME loan book. The bank has exhibited sharp improvement in CASA deposits ratio at 26.9% end June 2020 from 25% end March 2020.
Asset quality improves: Asset quality of the bank has improved with the sequential decline in fresh slippages of loans and higher NPA reductions in Q1FY2021.
- Fresh slippages of advances halved to Rs 161 crore in Q1FY2021 from Rs 332 crore in Q4FY2020. The recoveries and upgradations and write-offs stood at Rs 177 crore in Q1FY2021.
- The standard restructured advances book of the bank increased to Rs 1010 crore at end June 2020 from Rs 803 crore end March 2020.
- Provision coverage ratio jumped to 58.8% end June 2020.
| Asset Quality Indicators: South Indian Bank |
|
Jun-20 |
Mar-20 |
Dec-19 |
Sep-19 |
Jun-19 |
Variation |
| QoQ |
YoY |
| Gross NPA (Rs Crore) |
3245.44 |
3261.77 |
3243.69 |
3145.20 |
3154.22 |
-1 |
3 |
| Net NPA (Rs Crore) |
1992.86 |
2150.78 |
2211.88 |
2193.15 |
2134.73 |
-7 |
-7 |
| % Gross NPA |
4.93 |
4.98 |
4.96 |
4.92 |
4.96 |
-5 |
-3 |
| % Net NPA |
3.09 |
3.34 |
3.44 |
3.48 |
3.41 |
-25 |
-32 |
| % PCR |
58.80 |
54.20 |
50.40 |
48.10 |
45.10 |
460 |
1370 |
| % CRAR - Basel III |
13.49 |
13.41 |
12.02 |
12.08 |
12.17 |
8 |
132 |
| % CRAR - Tier I - Basel III |
10.80 |
10.80 |
9.60 |
9.60 |
9.70 |
0 |
110 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth eases marginally, loan growth steady: Business growth of the bank moderated slightly to 2% yoy at Rs 148288 crore at end June 2020 over June 2019. The moderation in business growth was driven by deceleration in deposits growth to 1% at Rs 82469 crore at end June 2020. However, the advances growth was flat at 3% yoy at Rs 65819 crore at end June 2020. The credit deposit ratio improved to 79.8% from 78.9% a quarter ago and 77.9% a year ago.
Retail, agriculture, MSME loan book continues to drive growth: The corporate book dipped 11% to Rs 18256 crore, while its share in loan book fell to 27.7% end June 2020 from 32.4% end June 2019. The retail loan book expanded 10% to Rs 20927 crore, agriculture book moved up 15% to Rs 10317 crore and MSME loan book gained 9% to Rs 16319 crore end June 2020.
Within the retail book, the mortgages moved up 11% to Rs 5252 crore at end June 2020. Gold loan book increased 33% to Rs 2931 crore, loan against FDs 16% to Rs 1718 crore and housing 12% to Rs 5463 crore at end June 2020.
CASA ratio jumps: CASA deposits of the bank moved up 12% at Rs 22179 crore gaining the share in overall deposits to 26.9% at end June 2020 compared to 25.0% a quarter ago and 24.2% a year ago.
Investment book of the bank eased on sequential basis to Rs 20601 crore end June 2020. The HTM book stood at Rs 16375 crore, AFS at Rs 4211 crore and HFT at Rs 15 crore. The modified duration of the AFS book stood at 3.31 years and overall investment book at 5.39 years.
Network expansion: Bank has network of 929 branches and 1426 ATMs at end June 2020.
Book Value per share stood at Rs 28.9 per share at end June 2020, while adjusted Book value (adjusting for NNPA and 10% of restructured advances) was at Rs 17.4 per share at end June 2020.
Quarterly Performance:
NII growth improves on higher NIMs: Bank has reported 10% growth in Net Interest Income (NII) at Rs 586.89 crore for the quarter ended June 2020. The interest earned was flat at Rs 1886.88 crore, while interest expended declined 4% to Rs 1299.99 crore in the quarter ended June 2020.
Non-interest income jumps: The non-interest income of the bank increased 57% to Rs 284.98 crore in Q1FY2021, as the treasury income surged to Rs 140 crore from Rs 49 core a year ago and other income moved up 76% to Rs 60 crore in Q1FY2021. Core fee income of the bank declined 9% to Rs 78 crore, while forex income dipped 46% to Rs 7 crore in Q1FY2021.
Net total income increased 22% to Rs 871.87 crore in the quarter ended June 2020.
Expense ratio improves: The operating expenses of the bank rose 17% to Rs 468.19 crore in the quarter ended June 2020. The expense ratio declined to 53.7% in the quarter ended June 2020 from 55.7% in Q1FY2020. The operating profit jumped 27% to Rs 403.68 crore in Q1FY2021.
Provisions up: The provisions and contingencies increased 43% to Rs 293.08 crore in the quarter under review. The provisions for NPA moved up to Rs 184 crore and standard assets Rs 11 crore, while bank has written back investment provisions of Rs 1 crore in Q1FY2021.
With the surge in provisions, the PBT declined 2% to Rs 110.60 crore in Q1FY2021.
An effective tax rate dipped to 26.2% in Q1FY2021 from 34.9% in Q1FY2020, helping the net profit to rise 11% to Rs 81.65 core in the quarter ended June 2020.
Financial Performance FY2020:
For the year ended March 2020 (FY2020), the bank posted 58% dip in the net profit at Rs 104.59 crore. The net interest income increased 15% to Rs 2317.50 crore, while non-interest income moved up 44% to Rs 1045.75 crore in FY2020. The operating expenses increased 14% to Rs 1717.61 crore, while provision and contingencies moved up 74% to Rs 1496.09 crore in FY2020. The profit before tax dipped 61% to Rs 149.55 crore in FY2020. The expense ratio dipped to 51.1% in FY2020 compared to 54.9% in FY2019. After considering 30.1% of effective tax rate down from 34.9% in FY2019, the net profit declined 58% to Rs 104.59 crore in FY2020.
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