KOCHI: Is Thrissur-headquartered South Indian Bank (SIB) quietly setting its sights on a net profit of Rs2,500 crore over the next three years?
While no explicit profit target was mentioned, the bank’s CEO & Managing Director, PR Seshadri, told analysts during the recent Q1 FY26 earnings call that SIB aims to push its return on assets (RoA) to 1.5 per cent in three years, up from just over 1 per cent now.
Analysts tracking the bank believe this RoA target implies a significant jump in profitability, especially when viewed against the backdrop of the bank’s current asset base and projected growth trajectory.
South Indian Bank reported a net profit of Rs322 crore for the quarter ended June 30, 2025. With an asset base of Rs1.27 lakh crore, this translates to an annualised RoA slightly above 1 per cent, or approximately Rs1,300 crore in annual net profit.
Therefore, an RoA of 1.5 per cent, even assuming only modest balance sheet growth, could take the profit figure close to Rs2,000–2,500 crore over the next three years.
12% loan growth
In fact, SIB has guided for a 12 per cent loan growth for the current financial year, which many analysts believe is achievable.
A source familiar with the bank’s internal targets told businessbenchmark.news that if this asset growth continues over the next few years, a 1.5 per cent RoA would imply a profit comfortably exceeding Rs2,500 crore – nearly double the current level.
“RoA is a direct indicator of how much net profit a bank earns relative to its total assets. When a bank says it will move from 1 per cent RoA to 1.5 per cent, it’s essentially talking about a 50 per cent jump in profitability, assuming the asset base remains constant. If assets grow as well, the jump in profit would be even more pronounced,” the source explained.
Seshadri’s RoA target, while seemingly bold, is not impossible. However, analysts are treating it with caution, given the headwinds the sector continues to face – including fierce competition for deposits, rising compliance costs, and uncertainty around credit demand.
Most banking analysts interpreted the RoA guidance as aspirational rather than certain.
To put the 1.5 per cent RoA target in perspective, South Indian Bank’s peers like Federal Bank and CSB Bank have historically posted RoA figures ranging between 1.1 per cent and 1.4 per cent, while top-tier private lenders like HDFC Bank and ICICI Bank hover closer to 2 per cent.
So, while SIB’s target is ambitious, it is not entirely out of reach, especially if asset quality remains stable and operational efficiency improves.
Nonagenarian institution
The lender, founded in 1929, is a nonagenarian institution undergoing a significant transformation under Seshadri’s leadership.
Over the past few years, the bank has been focusing on strengthening its balance sheet, improving asset quality, and enhancing profitability metrics.
While legacy issues and the burden of past non-performing assets (NPAs) had weighed down the bank in earlier years, it has recently shown signs of turning the corner.
For now, the June quarter profit of Rs322 crore provides a solid base. If the bank can sustain its RoA improvement journey alongside double-digit loan growth, the Rs2,500 crore mark may not be as far-fetched as it seems.
As one analyst put it, “Reaching a 1.5 per cent RoA will not just be a milestone in financial terms but will also signal that the bank’s transformation strategy is bearing real fruit.”
