Capitaline

Analyst Meet / AGM 16-Oct-20

Conference Call

South Indian Bank

Expects slippages of Rs 1700 crore and restructuring of Rs 1200 crore from moratorium book over next few quarters

South Indian Bank conducted a conference call on 16 October 2020 to discuss its financial results for the quarter ended June 2020. Murali Ramakrishnan, MD&CEO of the bank addressed the call\
Highlights:

Amid the pandemic situation, about 98% of the branches and ATMs were operational following the guidelines given by the local authorities.
The loan book under moratorium of the bank declined from 36.6% end June 2020 to 26.1% or Rs 17065 crore end August 2020.
The bank expects 10% or Rs 1700 crore of the loan book under moratorium to become NPA over next few quarters, of which Rs 1400 crore is likely to slip to NPA in next two quarters.
Segment wise, the slippages from the corporate segment are expected at Rs 600 crore, personal loans at Rs 350 crore and business loans at Rs 450 crore.
The bank also expects restructuring of another Rs 1200 crore loans from moratorium book, of which restructuring the corporate segment is expected at Rs 275 crore, personal loans at Rs 300 crore and business loan at Rs 625 crore.
As per the bank the corporate loans are accounts with exposure of above Rs 25 crore and business loans has exposure below Rs 25 crore.
The bank has witnessed collection efficiency of 79.9% in September 2020 with retail segment showing collection efficiency of 90-92%, business loans 76% and corporate loans at 71%.
The bank has continued to exhibit improving operating performance with better margin and increase in CASA deposits ratio.
The non-corporate loan book continued to grow driven by gold, housing, agriculture loan segments.
The share of corporate loan book has declined to 25% from 31% a year ago.
The bank has posted sharp improvement in NIM to 2.94% in Q2FY2021 from 2.69% in Q2FY2020.
As per the account which are not classified as NPA in Q2FY2021 due to SC order amounted to Rs 136 crore, while bank has created provisions of Rs 21 crore against these loans.
The bank continues to hold on to covid related provisions of Rs 105 crore created in Q4FY2020 and Q1FY2021, which are not used in the calculation of PCR
The bank expects PCR to be maintained at 60-63% including technical write-off for FY21 and FY2022, PCR excluding write-off is expected to be 39-40%.
The bank expects decline in PCR in H2FY2021 from current level of 65.2% due to higher slippages in Q3 and Q4 of FY2021.
The bank expects slippages to be lower in FY2022 than in FY2021.
The fresh slippages of loans stood at Rs 49 crore in Q2FY2021, while there was no corporate slippage in Q2FY2021.
The bank expects tepid growth opportunities for FY2021, while expects conditions to improve in FY2022 wherein targets loan growth of 10%.

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