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South Indian Bank reported a 96-per cent drop in net profit at ₹4.32 crore in the second quarter of the current fiscal against ₹111 crore in the corresponding period of the previous fiscal, due to higher provisions.
The bank was required to absorb an exceptional provision of ₹252.39 crore during the quarter. “Had the exceptional provision not been there, PAT would have been ₹169 crore for the current quarter,” VG Mathew, Managing Director and CEO, said.
However, the operating profit registered an all-time record growth of ₹163 crore (55 per cent), thanks to a clear shift of focus to retail, MSME and CASA, he added.
According to him, there was an exceptional provisioning done for ₹252.39 crore during the quarter against the NPA sold to an ARC during the earlier year. Major account in the sold pool is under the resolution process under the Insolvency and Bankruptcy Code which requires an upfront prudential provisioning of 50 per cent on account of which the MTM value of SR got affected by 25 per cent. With the incremental provisioning made, the provision coverage of the pool crossed 50 per cent which increased the prospects of recovery, he said.
“We will bounce back in the following quarters, as the growth drivers are MSME loans, mortgage loans, agriculture and auto loans. We are gaining market share in these segments,” the CEO said.
Asked whether the bank could sustain the growth in this slowdown period, Mathew said: “our base is very low and we are in a safe position to grow in a reasonable manner”.
The bank, he said, has successfully managed its NPA in spite of challenging business environment. Accordingly both gross and net NPA position improved by 39 bps and 20 bps Y-o-Y basis respectively. The bank has fully recognised its corporate stressed accounts as non performing.
The total business increased by ₹12,239 crore to ₹1,16,859 crore, registering a growth of 12 per cent. Deposits increased by ₹6,950 crore to ₹67,142 crore (12 per cent), CASA by ₹2,793 crore to ₹16,490 crore (20 per cent).
Total advances increased by ₹5,289 crore to ₹49,717 crore, registering a growth of 12 per cent. The capital adequacy ratio stood at 11.74 per cent as on September 30.
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