The Thrissur-based South Indian Bank is looking at a credit growth of about 10 per cent in FY22, assuming the economy revives in the second half of the current fiscal. We have laid down plans for the growth of about 18-20 per cent in the coming years, says Murali Ramakrishnan, Managing Director and CEO. We are continuously monitoring the impact of Covid and recovery of the economy and will keep on calibrating our growth plans accordingly, he adds. Excerpts:
What are the plans for the current fiscal year?
It is the decision of the bank to rejig the existing portfolio, with the focus to diversify the risk both in assets and liabilities. We are replacing the bulk deposit with retail deposit and the lumpy corporate exposures with diversified retail exposures.
The bank has been following a branch structure where asset and liability business were managed by branches. To facilitate this, we had a closer look at the structure of the bank. Post our assessment, a dedicated vertical asset structure was formed for all retail assets in businesses, in which the branches would act as one more channel for sourcing new leads from the existing customers and walk-in potential customers.
Similarly, MSME and the corporate banking vertical has been formed with a dedicated sales structure across the country.
I am happy to share that the new vertical structure is in place with dedicated teams. Wherever we felt that the internal talents are not available, especially in the retail asset vertical, we have recruited a few experts laterally to drive those businesses.
Apart from this, we have set up a separate data science division tohelp us do analytics in the area of assets, liability, collection. We have also set up separate operations divisions to take care of back-end fulfillment of asset and liabilities transactions.
What would be the impact of Covid-19 on the business?
Compared to the first wave we are well prepared, and the government has also not resorted to the complete lockdown. Also, we now have vaccines. We are closely assessing the impact of the second wave on our borrowers and wherever we feel there is a genuine need, we are extending full support with restructuring as per regulation.
We had extended moratorium benefits to all borrowers, in line with other banks. We were witnessing improvement in business activities till March, which was impacted by the second wave.
What has been its impact on NRI remittances?
Owing to the pandemic, most people, including NRIs, keep a buffer in their bank accounts for emergencies. Further, there are several restrictions placed in many countries, which have resulted in increased remittances for meeting the financial needs back at home.
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The rupee had appreciated against the dollar in FY21, which has led to an increase in remittances. Overall, we experience moderate growth in remittances during FY21.
Can you specify your plans in raising equity capital?
As part of the Vision 2024 strategy, the bank has worked out the equity capital requirement, based on the business projections for the next three years. The recent equity capital raising of ₹240 crore through marquee domestic institutional investors was in line with our stated strategy.
The envisaged equity capital will be used to strengthen the balance sheet and build a buffer against the pandemic. We intend to raise the balance tranche of equity capital of ₹510 crore by December 2021.
The bank’s share price is low, which is not giving much gain to investors. Will they reflect deeper troubles?
We are completely cognizant of the pain our existing loyal investors have suffered over the past few years in terms of subdued share price performance. However, with key initiatives by new management, the market has appreciated the efforts, which are reflected in the share price performance of the bank in the last six months.
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We are happy to say that even after fresh equity capital, our overall market capitalisation has improved without an impact of revised valuation multiple. Further, given the revised book value of ₹27.7 per share against the market price of about ₹10, we believe there is inherent value in the stock and it deserves timely appreciation.
How are you preparing to tackle the Covid-19 virus? Are your employees fully vaccinated?
With the outbreak of the pandemic, the bank had, from the beginning of the calendar year 2020, initiated several proactive measures to safeguard the safety and security of employees. Through periodic instructions and continuous monitoring, it was ensured that all offices of the bank funtion strictly following Covid protocols.
The bank has initiated a few new employee benefits such as medical insurance for treatment of Covid and life insurance in the unfortunate event of the death of an employee. Further, the bank will be reimbursing the vaccination cost for all employees and their dependent family members.