CRAR grows 210 bps to 16.04 pc; PCR at comfortable 72.8 pc
By CL Jose
KOCHI/October 21-2022: The Thrissur-headquartered South Indian Bank (SIB) seems to have shed all its past hangover, and has forged ahead to earn Rs223 crore net profit for the second quarter ending September 30, 2022, against a loss of Rs187 crore in the comparable previous period – rendering it impossible to ‘express’ a rate of growth.
The CARE Ratings & India Ratings & Research has recently revised the rating outlook of the bank upward to ‘Stable’ from ‘Negative’. The SIB share was trading close to Rs10.95 towards 10.30 AM on NSE.
With Rs726 crore having earned during Q2, the bank claims to have earned the highest ever quarterly net interest income (NII) this period.
On the loan disbursement front, the bank has recorded the highest half-yearly figure of Rs26,089 crore at a time when many viewed SIB as going too easy on lending.
The quarter saw the total advances grow by 17 per cent year-on-year to Rs67,963 crore, compared with Rs58,309 crore for the same period last year.
Another sterling performance was on the net interest margin (NIM) front, where the bank could improve its count by a smart 72 basis points (bps) to 3.21 per cent which is very much comparable to its better performing peers in the market.
Two significant areas the market has long been watching keenly on SIB were the bank’s provision coverage ratio (PCR) and its capital adequacy ratio (CAR) or capital to risk-weighted assets ratio (CRAR), where many had felt SIB needed a lot of catching up.
Today, as the second quarter numbers came out, the PCR stands at 72.79 per cent after gaining a whopping 777 basis points (bps) year on year.
Comfortable CRAR
On CAR, SIB has reached a comfortable level of 16.04 per cent growing by 210 bps from 13.94 per cent, with a decent Tier 1 ratio of 13.42 per cent, obviating any urgent need for capital raising, which would have been a tall challenge for the bank given the high yield of its debt securities and low market price of its shares
Asst quality improves
The asset quality of the bank has also been posting gradual and steady improvement over the past few quarters.
While the gross NPA has declined from 6.65 per cent to 5.67 per cent year on year, net NPA fell 134 bps year on year to 2.51 per cent compared with 3.85 per cent a year ago.
The bank clams that on the corporate loan book, which has been a perennial pain point for the bank for the past few years, it has achieved zero slippages on new loans since October 2020.
Gold loan, which has become a lifeline for some banks of late, has registered a growth of 36 per cent to Rs12,913 crore. More and more banks seem to be following the footsteps of CSB Bank on this, though not with such vigour.
