Tamilnad Mercantile Bank conducted a concall on 23 January 2023 to discuss the financial results for the quarter ended December 2022 and prospects of the bank. S Krishnan, MD&CEO of the bank addressed the call:

Highlights:

The bank has exhibited healthy performance on net worth, book value, RoA and RoE and CET 1 front. The bank has improved RoE to 17.14% in Q3FY2023.

The advances of the bank have increased by 9% end December 2022. The deposit growth is moderate at 3%, but CASA deposits have increased by 10%.

The bank has continued to improve asset quality with the reduction in gross and net NPAs. The GNPA has declined 1.7% and NNPA to 0.75% end December 2022. The provision coverage ratio has improved to 90% end December 2022.

The net profit of the bank has jumped by 38% to Rs 290 crore in Q3FY2023. The net interest margin was healthy at 4.5% in Q3FY2023.

The fresh slippage ratio was moderate at 0.19% in Q3FY2023. The bank has contained credit cost at 0.32% against the guidance of 0.5-0.75%.

The cost of deposits has been maintained stable at 4.59%. The bank has reduced cost to income ratio to 41.93% from 43.16% in Q3FY2022.

The fresh slippages of loans was at Rs 66 crore in Q3FY2023 against the SMA 2 loan book of Rs 985 crore end September 2022.

The bank has substantially reduced the SMA loan book to 8.41% end December 2022 from 12.42% end September 2022 and 10.19% end December 2021.

SMA 2 loan Book has also declined to 2.26% from 2.82% a quarter ago.

The stressed asset portfolio of the bank has declined to 3.97% from 5.97% a year back.

Within the loan book, the share of Retail, Agriculture and MSME (RAM) loan book has increased by 200 bps in Q3FY2023 to 89% end December 2022. The share of the corporate loan book was at 11%.

The retail loan book has increased 16%, agriculture 13% and MSME 7% leading to overall RAM loan book growth of 11% end December 2022.

The bank is targeting loan growth of 12% for FY2023 and 10-12% for FY 2024.

The bank expects to maintain a net interest margin of above 4% on conservative.

The bank Expects to maintain RoA of above 1.75%.