South Indian Bank Q1 FY24: Lender's stock plunges after asset quality worsens

Shares of South Indian Bank plunged more than 7 per cent on Thursday after the lender reported that its Gross Non-Performing Asset (GNPA) dropped from Rs 3,708.3 crore in Q4 FY23 to Rs 3,803.9 crore in Q1 FY24 on a quarter-on-quarter basis. The net NPA was at Rs 1,325.7 crore against Rs 1,293.6 crore quarter on quarter.

The lender reported that its gross non-performing asset (GNPA) came down by 74 bps from 5.87 per cent to 5.14 per cent on Y-o-Y basis. The net NPA (NNPA) of the lender for the quarter stood at 1.85 per cent, which was down from 1.86 per cent on a year-on-year basis.

The lender reported a net profit of Rs 202.3 crore for the first quarter of FY24, in comparison to Rs 115 crore in the corresponding quarter of FY23.

The Kerala-based lender recorded a total income for the quarter at Rs 2,386.06 crore, up 27.7 per cent on-year from Rs 1,868.07 crore during the corresponding quarter of last year. The lender's net interest income (NII) stood at Rs 807.7 crore during the quarter.

The shares of the lender closed at Rs 21.10, after falling by 7.46 per cent, on NSE.

Other highlights of the report are:

> NIM improved by 60 bps from 2.74% to 3.34% on Y-o-Y basis
> Return on Equity improved by 412 bps from 7.68% to 11.80% Y-o-Y basis
> Return on Assets increased by 27 bps from 0.46% to 0.73% Y-o-Y basis
> Recovery and upgradation in NPA accounts increased from Rs. 296.23 Cr in Q1 FY23 to Rs.
361.71 Cr in Q1 FY24

The bank reported that its retail deposit has grown by Rs 5,583 crore from Rs 86,460 Crore to Rs 92,043 Crore, showing an increase of 6 per cent on Y-o-Y basis.

The NRI Deposit grew at a slower pace by Rs 784 crore from Rs 27,598 crore to Rs 28,382 crore on Y-o-Y basis. Its CASA grew by 3 per cent on Y-o-Y basis with growth in savings account by 2 per cent and current account by 6 per cent, respectively.

The bank said its personal loan book grew by Rs 930 crore from Rs 1,005 crore to Rs 1,935 Crore, showing an increase of 93 per cent on Y-o-Y basis. Gold Loan portfolio went up by Rs 2,517 crore from Rs 11,961 crore to Rs 14,478 crore, showing an increase of 21 per cent on Y-o-Y basis.

Murali Ramakrishnan, MD & CEO of the Bank, while announcing the results, said during the period, the bank could register growth in all the desired segments with a focus on building quality assets across all verticals like corporate, SME, auto loan, credit card, personal loan, gold loan.

Earlier this week, South Indian Bank announced that it will hike the marginal cost of funds-based lending rate (MCLR) from 5 to 10 bps. The lender will raise its lending rates from July 20, 2023.

After the latest revision, the overnight MCLR rate has been raised to 9.05 per cent, while that of one-month and three-month tenure rates are 9.10 per cent and 9.10 per cent, respectively.

The six-month MCLR is at 9.25 per cent, and the one-year lending rate will now be 9.50 per cent.