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South Indian Bank tanks 12% after poor numbers in Q2, BFSI News, ET BFSI

Banking & Finance

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New Delhi: Shares of South Indian Bank were on a free fall on Friday, declining as much as 12 per cent after a disappointing set of numbers in September 2021 quarter.

The Kerala-based private lender posted a net loss of Rs 187 crore in the September quarter as against Rs 65 crore profit in the year-ago period on higher provisions and lower interest income.

Following the earnings update, shares of the bank tanked over 12 per cent to Rs 9.22, before recovering to Rs 9.78 at 10.05 am.

The old generation private sector bank’s operating profit fell 71 per cent at Rs 112 crore from Rs 391 crore in the same period. Interest income fell to Rs 1,647 crore from Rs 1,899 crore.

Shares of South Indian Bank have underperformed the BSE Sensex in the year 2021 so far as it has added only nine per cent against a 28 per cent rise in the BSE barometer. The scrip is down as much as 3 per cent in the last one month.

Provisions increased to Rs 362 crore from Rs 303 crore while asset quality worsened. The bank’s gross NPA ratio rose to 6.65 per cent at the end of September from 4.87 per cent a year back. Net NPA rose to 3.85 per cent.

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South Indian Bank back in black on lower provisioning

Banking & Finance

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The provision coverage ratio improved from 54.22% to 58.73% on a year-on-year (y-o-y) basis.

South Indian Bank on Friday reported a net profit of Rs 6.79 crore for the fourth quarter of FY21, against a loss of Rs 143.69 crore in the year-ago period, largely because of lower provisioning for bad loans. Provisions and contingencies for the fourth quarter stood at Rs 412.29 crore, compared with Rs 723.80 crore in the corresponding period of FY20 and Rs 499.48 crore in Q3 of FY21.

The Thrissur based lender had reported a net loss of Rs 91.62 crore during the third quarter of FY21. For the whole FY21, the bank has reported a net profit of Rs 61.91 crore, against Rs 104.59 crore in FY20.

The asset quality deteriorated, with GNPA ratio seen at 6.97%, compared to 4.90% in the preceding quarter and 4.98% in the year-ago period. Net NPA ratio for Q4 was at 4.71%, against 2.1% in Q3 and 3.34% in Q4 of FY20.

The provision coverage ratio improved from 54.22% to 58.73% on a year-on-year (y-o-y) basis.

Murali Ramakrishnan, MD & CEO, said the bank has been able to meet the targeted levels of recovery or upgrades which have helped in containing the GNPA level despite higher slippages during the year on account of Covid.

He added that the lower quarterly profit was mainly on account of credit cost on the fresh slippages during the fourth quarter, as a result of additional stress in the economy due to the pandemic.

The capital adequacy ratio stood at 15.42% as on March 31, 2021. The lender raised Rs 240 crore during the quarter which strengthened the common equity.

Total deposit base at the end of the March quarter is seen higher by 9% y-o-y at Rs 69,827 crore, while advances declined by 9% to Rs 59,418 crore.

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