SIB becomes a retail-centric bank

Retail loans surpass corporate book

KOCHI: The Thrissur-headquartered South Indian Bank (SIB) though has long been making noise about its plan to convert the bank into a ‘retail banking powerhouse’ after its bitter experience from the corporate book it’s towards the close of FY20 that the bank could achieve it.

To be true to the words, SIB is far from becoming a retail powerhouse yet, but a retail-centric bank, to say the least.

The bank has not only been able to grow its retail loan book by a handsome 15 per cent from Rs18,458 crore to Rs21,245 crore – an increase of Rs2,787 crore during the year since March 31, 2019, the retail portfolio of the bank has overtaken the corporate portfolio by Rs2,419 crore during the period, thus becoming a bank with focus on retail banking.

SIB has released these figures in a regulatory filing to the stock markets on Monday.

While the retail portfolio grew from Rs18,458 crore to Rs21,245 crore, corporate loan book of the bank declined by 12 per cent during the period from Rs21,436 crore to Rs18,826 crore.

Interestingly, corporate loans as of March end, 2020 constitutes only 28.62 per cent of the total advances of the bank at Rs65,790 crore – dropping more than 5 percentage points from 33.69 per cent an year earlier. The gain registered by retail book during this period was more than three percentage points- from 29 per cent to 32.29 per cent,

VG Mathew, the MD and CEO of the bank had said a few months back that the bank’s balance sheet has been strengthened by way of reduction in corporate exposure and growth in the retail, agri and MSME portfolios.

“The retail portfolio has grown at 17.66 per cent Y-o-Y and is already accounting for 30 per cent of the loan book, taking the bank closer to its stated objective of becoming a retail banking powerhouse,” Mathew had said while commenting on the third quarter financials.

While the customer deposits during the past one year improved by 10 per cent from Rs73,597 crore to Rs80,705 crore, the certificate of deposits (CDs), tracking the trend in the market, has fallen by two-thirds, from Rs6823 crore to Rs2334 crore during the one-year period.

As a trend, banks issue CDs when deposit growth is low and credit demand is high. CDs are high cost liabilities for banks and CDs are issued only when stiff liquidity conditions exist in the markets.

The total advances grew by a marginal three per cent during the said period from Rs63,636 crore to 65,790 crore, whereas the volume of MSME advances improved 5 per cent – from Rs15,069 crore to Rs15,846 crore.

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