South Indian Bank reports Rs 102 crore net profit in Oct-Dec quarter

South Indian Bank

South Indian Bank recorded a net profit of Rs 102.75 crore on Tuesday, which was limited by money set aside as ageing provisions for security revenues in accordance with a regulatory regulation.

The Thrissur-based institution posted a loss of Rs 50.31 crore in the previous September quarter, while profit was Rs 223 crore in the previous September quarter.

Murali Ramakrishnan, the bank’s chief executive and managing director, said the firm chose to take a Rs 312 crore provision for the quarter due to a December 4, 2022 RBI directive requiring institutions to make ageing provisions for security receipts (SRs) dating before 2017.

He stated that the bank has sold non-performing assets worth Rs 1,955 crore to asset reconstruction businesses since 2004, with the balance volume after redemptions standing at Rs 1,455 crore, for which a provision had to be made.

If the stock of SRs remains unchanged, the bank will have to set aside another Rs 48 crore in the fourth quarter and Rs 15 crore in the entire FY24, he added, aiming for a provision write-back of Rs 100 crore in FY24 to help earnings.

During the reporting quarter, the bank’s core net interest income increased by 44 per cent to Rs 825 crore, but non-interest revenue was negative by Rs 34.18 crore due to additional money set aside as provisions for maturing security receipts.

Also Read | South Indian Bank gross advances increases by 18 per cent YoY in Q3

The loan growth rate was over 18 per cent, whereas the deposit growth rate was only 3 per cent. Ramakrishnan expressed optimism that the bank will be able to generate enough liabilities to fund credit growth, claiming that deposits have an elasticity that allows a rate hike to help bridge any gap.

The net interest margin (NIM) increased to 3.52 percent for the quarter, and Ramakrishnan predicted that the bank will end FY23 with a NIM of 3.20 percent.

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