KOCHI: South Indian Bank (SIB) has brought down its gross non-performing assets (GNPA) below the Rs3,000-crore mark for the first time since 2019, thanks to a major clean-up effort in the March 2025 quarter.
The Thrissur-headquartered bank wrote off over Rs900 crore worth of bad loans in Q4, with around Rs550 crore of the write-offs coming from its MSME portfolio.
The move was backed by full provisioning, said PR Seshadri, managing director and CEO of the bank, during an earnings call with analysts.
Gross NPAs of SIB, which stood at Rs3,620 crore a year ago and had risen to Rs3,736 crore by the end of the December quarter, have now dropped to Rs2,800 crore as of March-end.
This includes a recovery of over Rs200 crore during the quarter. The decline in NPA also deserves merit in the present context as the bank’s advances have grown 10 per cent in the past year from Rs78,063 crore to Rs85,682 crore as of March end, 2025.
The contraction of GNPA reflects SIB’s renewed push to strengthen its balance sheet and improve asset quality. However, experts caution that write-offs reduce the reported NPA number on paper but do not necessarily indicate actual recovery.
“This doesn’t mean the bank has moved past these bad loans. Recovery efforts may still be underway for the written-off accounts,” a banking analyst told businessbenchmark.news.
For years, high NPAs have been South Indian Bank’s Achilles’ heel, dragging down its valuation in the stock market.
Despite a book value of Rs38.60 per share, SIB’s stock closed Friday at just Rs27.49 on NSE – significantly below book and at a low price-to-earnings (P/E) multiple of 5.46.
Market valuation of peers
In contrast, its Kerala-based peers command much higher valuations. CSB Bank, with a book value of Rs238.68, closed at Rs358.05 – 1.44 times its book value – and a P/E of 10.46. Federal Bank’s share price of Rs198.94 is also well above its book value of Rs135.99 and trades at a P/E multiple of 11.84.
While SIB’s asset clean-up is a step in the right direction, the valuation gap shows investor confidence will take more time – and consistent performance – to return.
Seshadri in his briefing has indicated that the bank’s focus area of growth will be MSME and retail and going forward, the bank will seek to bring down the low yielding corporate loans in order to accommodate more of MSME and retail assets.
