The Hindu Business Line : South Indian Bank Q1 profit rises by 27%

Kochi, July 13 The net profit of South Indian Bank has grown by 27 per cent to Rs 38.62 crore (Rs 30.37 crore) during the first quarter of the current fiscal. The total income of the bank grew by 26 per cent to Rs 405.89 crore (Rs 321.97 crore).

The interest rate spreads were under pressure during the quarter since the yield on advances continued to remain low while the cost of deposits were going up, Dr V.A. Joseph, Chairman and Chief Executive Officer of the bank said. This was mainly because the increasing cost of deposits could not be passed on to all categories of advances in a uniform manner. But the bank has taken steps to redress the problem.

It has revised specific lending rates from July and the results would become evident from the current quarter onwards. Through campus interviews, the bank has recruited 500 new staff, strengthening its marketing department. To increase the corpus of low-cost deposits such as current and savings bank account, the bank has also set a target of 1,000 additional customers for every branch during the current year. While it was able to add close to 50,000 new accounts in the first quarter, the bank hoped to close in on the target by the year-end backed by a fresh team and aggressive drive from the marketing department.

The bank has targeted a bottom line growth of 27 per cent with net profits expected to grow to Rs 190 crore, up from Rs 152 crore recorded during last year. The bank has already recorded a 27 per cent growth for the last quarter and hoped to better it in the coming quarters. However, Dr Joseph said that the banking industry has come under increasing pressure because of the inflationary spiral, increased corpus of cash reserve ratio that do not yield any interest and also increased provision for market related investments as the capital market returns continue to remain quite low.

The total business of the bank has increased by 22 per cent to Rs 26,022 crore (Rs 21,343 crore) on a year-on-year basis.

While deposits have gone up by 20 per cent to Rs 15,378 crore (Rs 12,834 crore), advances have increased by 25 per cent to Rs 10,643 crore (Rs 8,509 crore). The capital adequacy ratio of the bank was as high as 13.93 per cent against the regulatory requirement of 9 per cent. During the quarter, the book value per share has increased from Rs 107.01 to Rs 132.70.