Net NPA falls from 5.05 to 2.87 pc; PCR, CRAR at comfortable level
By CL Jose
KOCHI/July 26-2022: A 72 per cent year-on-year (YoY) decline in provisioning helped the Thrissur-headquartered nonagenarian lender, South Indian Bank (SIB), achieve a more than 11-fold growth in its net profit for the first quarter (Q1) of the current year (FY23) to Rs115.35 crore) compared with Rs10.31 crore a year earlier.
However, the Q1 profit is much lower than the profit the bank earned for the immediate previous quarter, at Rs272.04 crore.
The operating profit for the quarter under discussion at Rs316.82 crore was 38 per cent lower than that the bank earned for the same period a year ago at Rs510.04 crore, whereas what the bank earned for the fourth quarter of FY22 was marginally lower at Rs287.94 crore.
Retail, the saviour
This time, treasury failed to generate any profit like most banks did, thanks to the increase in interest rates. The treasury handed out a Rs2.75 crore loss during the quarter under discussion compared with a profit of Rs161.38 crore for the same quarter last year.
While ‘corporate’ has been a pain in the neck for some time now, doling out losses quarter after quarter, retail has been the biggest contributor to the bottom line of the bank.
For the quarter ending June 30, 2022, the profit earned from the retail operations was to the tune of Rs193.41 crore (net of provisions) compared with a lower profit of Rs108.87 crore the bank earned for the same period last year.
During the respective periods, the contribution of loss from the corporate portfolio were Rs81 crore and Rs297.84 crore respectively.
NPAs still remain high
The overhang of NPAs or bad loans still poses challenge to the bank though not as severe as before. While the gross NPAs as of June end, 2022 (Q1) were at Rs3798.64 crore against Rs4677.12 crore a year earlier, the corresponding percentage representations were at 5.87 per cent and 8.02 per cent respectively.
At the same time, the net NPA declined markedly from Rs2,854.64 crore or 5.05 per cent as of June end, 2021 to Rs1,800.54 crore or 2.87 per cent as of June end, 2022.
CRAR & PCR
Though the bank has proposed to take shareholders’ approval for capital increase, the bank is unlikely to go for it as the bank is on a comfortable footing on capital adequacy with its CRAR having improved to 16.25 per cent from 15.47 per cent a year ago.
Provision coverage ratio (PCR) has staged a smart growth during the past more than a year when it improved by 1138 basis point (bps) to 70.11 per cent compared with 58.73 per cent as of March 2021.
Balance sheet grows modestly
While the deposits grew from Rs84,611.32 crore to Rs88,195.55 crore during the one-year period to June end, 2022, sequentially ie. quarter-on-quarter, deposits contracted marginally from the level of Rs89,141.74 crore.
Advances also witnessed a modest growth of 11 per cent as they increased from Rs56,541.94 crore to Rs62,760.09 crore during the one-year period to June end, 2022.
Gold loans continued to grow consistently and rose 27 per cent YoY to Rs 11,961 crore as of June end, 2022.
During the said period, the asset base of the bank made a marginal growth of 6.6 per cent, from Rs94,396.47 crore to Rs100,631.99 crore as of June end, 2022.
