SIB shares traded at little over one-fifth of BV on Thursday
KOCHI/October 15: The Thrissur-headquartered South Indian Bank (SIB) has reported a net profit of Rs65.09 crore for the second quarter ending September 30, 2020 compared with Rs84.48 crore a year earlier- representing a decline of 23 per cent.
The bank has come under the stewardship of a new managing director and chief executive officer (CEO), Murali Ramakrishnan, on October 1.
The bank has posted a net profit of Rs81.65 crore for the immediate previous quarter ending June 30. For the first half (H1), the bank has turned in a profit of Rs146.74 crore compared with Rs157.74 crore in the earlier comparable period.
The SIB share, with an improved book value (BV) of Rs31.20 as of September 30, has closed at Rs6.80 on Thursday, pointing to an abysmally low price-to -book ratio of 0.22.
A close look at the business segments of the bank reveals that both treasury and corporate portfolio did a bad job this quarter by handing out losses (before tax) of Rs48.63 crore and Rs127.64 crore respectively.
At the same time, the retail portfolio, where the bank has been throwing its weight behind, has come to the rescue of the bank with a profit before tax (PBT) of a decent Rs208.44 crore for the quarter under review compared with Rs178.17 crore a year ago.
The bank earned an interest income for the quarter of Rs1898.84 crore against Rs1886.88 crore for the same period a year ago. The quarter closed with a total income of Rs2138.74 crore compared with Rs2203.18 crore for the same period last year.
Spike in employees cost
But the operating expenses during the quarter under review was higher by about Rs67 crore at Rs489.04 crore as against Rs422,06 crore year-on-year.
In fact, employees cost during the quarter was higher by about Rs73 crore and this has contributed substantially to the rise in the operating expenses this time.
Moreover, there has not been any abating in the provision expenses (other than tax) in the past several quarters with the same this time being Rs326.40 crore compared with Rs306.34 crore a year ago.
The bank was required to debit Rs131.56 crore to the profit & loss account on account of a fraud for which a remaining Rs232.68 crore more will have to be debited between the ensuing two quarters too.
While the gross NPAs as on September 30, was to the tune of Rs3182.16 crore representing 4.87 per cent of the assets, the net NPA has declined modestly from Rs2193 crore to Rs1655.39 crore on absolute terms, whereas percentage wise the improvement was from 3.48 per cent to 2.59 per cent year-on-year.
The capital adequacy ratio (CAR), which shows the capital position of the bank, was at 13.94 per cent, better than 12.08 per cent a year ago. The asset base of the bank has expanded during the year from Rs94,955 crore to Rs96,645.63 crore.