South Indian Bank has posted 23% decline in the net profit to Rs 65.09 crore in the quarter ended September 2020 (Q2FY2021), driven by decline in non-interest income, higher operating expense and elevated provisions. The bank has continued to make higher provisions leading to surge in provision coverage ratio to 65.2% end September 2020 from 58.8% end June 2020.
However, the bank has posted 13% growth in the net interest income and improved net interest margins to 2.94%. The bank has improved asset quality, while substantially improving provision coverage ratio.
The advances growth of the bank has eased to 2% from 3% a quarter ago, but the bank has exhibited healthy 11% growth in the focused retail, agriculture and MSME loan book. The bank has exhibited sharp improvement in CASA deposits ratio at 27.8% end September 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 Q2FY2021.
- Fresh slippages of advances dipped to Rs 51 crore in Q2FY2021 from Rs 161 crore in Q1FY2021. The recoveries and upgradations and write-offs stood at Rs 115 crore in Q2FY2021.
- The standard restructured advances book of the bank rose to Rs 1045 crore at end September 2020 from Rs 1010 crore end June 2020.
- The securities receipt book of the bank stood at Rs 1310.89 crore with provisions of Rs 553.22 crore end September 2020.
- Provision coverage ratio jumped to 65.2% end September 2020.
- The loan book under moratorium has declined to 26.1% end August 2020 from 36.3% end June 2020 with agriculture loan book under moratorium at 11.1%, business loans 26.1%, personal loans 37.1% and corporate loans at 25.4%.
| Asset Quality Indicators: South Indian Bank |
|
Sep-20 |
Jun-20 |
Mar-20 |
Dec-19 |
Sep-19 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
3182.16 |
3245.44 |
3261.77 |
3243.69 |
3145.20 |
-2 |
-2 |
1 |
| Net NPA (Rs Crore) |
1655.39 |
1992.86 |
2150.78 |
2211.88 |
2193.15 |
-17 |
-23 |
-25 |
| % Gross NPA |
4.87 |
4.93 |
4.98 |
4.96 |
4.92 |
-6 |
-11 |
-5 |
| % Net NPA |
2.59 |
3.09 |
3.34 |
3.44 |
3.48 |
-50 |
-75 |
-89 |
| % PCR |
65.20 |
58.80 |
54.20 |
50.40 |
48.10 |
640 |
1100 |
1710 |
| % CRAR - Basel III |
13.94 |
13.49 |
13.41 |
12.02 |
12.08 |
45 |
53 |
186 |
| % CRAR - Tier I - Basel III |
11.20 |
10.80 |
10.80 |
9.60 |
9.60 |
40 |
40 |
160 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business Highlights:
Business growth eases: Business growth of the bank moderated to 1% yoy at Rs 147970 crore at end September 2020 over September 2019. The moderation in business growth was driven by deceleration in deposits growth to 0% at Rs 82621 crore at end September 2020. The advances growth also eased to 2% yoy at Rs 65349 crore at end September 2020. The credit deposit ratio declined to 79.1% from 79.8% a quarter ago and rose from 77.1% a year ago.
Retail, agriculture, MSME loan book continues to drive growth: The corporate book dipped 17% to Rs 16402 crore, while its share in loan book fell to 25.1% end September 2020 from 30.8% end September 2019. The retail loan book was flat at Rs 19237 crore, agriculture book moved up 6% to Rs 9999 crore and MSME loan book surged 27% to Rs 19711 crore end September 2020.
CASA ratio jumps: CASA deposits of the bank moved up 11% at Rs 22978 crore gaining the share in overall deposits to 27.8% at end September 2020 compared to 26.9% a quarter ago and 24.9% a year ago.
Investment book of the bank increased 5% to Rs 22015 crore end September 2020. The HTM book rose 5% to Rs 17483 crore, AFS moved up 4% to Rs 4464 crore and HFT book stood at Rs 68 crore. The modified duration of the AFS book stood at 2.2 years and overall investment book at 5.15 years.
Network expansion: Bank has network of 926 branches and 1438 ATMs with employee base of 7818 employees at end September 2020.
Book Value per share stood at Rs 29.3 per share at end September 2020, while adjusted Book value (adjusting for NNPA and 10% of restructured advances) was at Rs 19.6 per share at end September 2020.
Quarterly Performance:
NII growth improves on higher NIMs: Bank has reported 13% growth in Net Interest Income (NII) at Rs 663.11 crore for the quarter ended September 2020. The interest earned declined 3% to Rs 1898.84 crore, while interest expended dipped 10% to Rs 1235.73 crore in the quarter ended September 2020.
Non-interest income declines: The non-interest income of the bank declined 4% to Rs 239.90 crore in Q2FY2021, as the treasury income dipped 60% to Rs 33 crore and core fee income also fell 6% to Rs 87 crore in Q2FY2021. The forex income moved up 30% to Rs 13 crore and other income jumped 68% to Rs 106 crore in Q2FY2021.
Net total income increased 8% to Rs 903.01 crore in the quarter ended September 2020.
Expense ratio rises: The operating expenses of the bank moved up 16% to Rs 489.04 crore in the quarter ended September 2020. The expense ratio rose to 54.2% in the quarter ended September 2020 from 50.6% in Q2FY2020. The operating profit rose 1% to Rs 413.97 crore in Q2FY2021.
Provisions up: The provisions and contingencies increased 7% to Rs 32640 crore in the quarter under review. The provisions for NPA moved up 1% to Rs 286 crore and standard assets jumped to Rs 28 crore, while bank has created investment provisions of Rs 13 crore in Q2FY2021.
With the rise in provisions, the PBT declined 17% to Rs 87.57 crore in Q2FY2021.
An effective tax rate increased to 25.7% in Q2FY2021 from 19.6% in Q2FY2020, leading to further decline in net profit by 23% to Rs 65.09 core in the quarter ended September 2020.
Financial Performance H1FY2021:
For the six months ended September 2020 (H1FY2021), the bank posted 7% dip in the net profit at Rs 146.74 crore. The net interest income increased 12% to Rs 1250.00 crore, while non-interest income moved up 22% to Rs 524.88 crore in H1FY2021. The operating expenses increased 16% to Rs 957.23 crore, while provision and contingencies moved up 21% to Rs 619.48 crore in H1FY2021. The profit before tax declined 9% to Rs 198.17 crore in H1FY2021. The expense ratio rose to 53.9% in H1FY2021 compared to 53.0% in H1FY2020. After considering 26.0% of effective tax rate down from 27.6% in H1FY2020, the net profit declined 7% to Rs 146.74 crore in H1FY2021.
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