The Covid pandemic seems to have taken a toll on South Indian Bank’s net profit in Q2 of the current fiscal, which was down at ₹65.09 crore against ₹84.48 crore in the corresponding period of the previous year.

The net profit in Q1 of the current fiscal was ₹81.65 crore.

However, the operating profit for the second quarter has grown marginally from ₹411.45 crore to ₹413.97 crore.

Murali Ramakrishnan, who recently took over as Managing Director and CEO, said the bank has conservatively provided ₹24 crore of extra provisioning towards accounts which has technically become NPA due to government direction. This is one of the reason for a reduction in net profit.

Despite reduction in the profit from the treasury segment, he said the bank posted a net profit for the quarter mainly on account of the higher Net Interest Income due to reduction in the cost of deposits and improved recoveries and upgrades.

Net interest income up

The net interest income improved from ₹584.30 crore to ₹663.11 crore during the quarter. Net Interest Margin improved from 2.61 per cent to 2.78 per cent. The gross NPA stood well contained at 4.87 per cent (vis-a-vis 4.92 per cent last year) and Net NPA improved to 2.59 per cent as against 3.48 per cent a year ago.

Despite the pandemic, he said the bank could register a reasonable growth in the business and personal segment loans.

Corporate loans down

As part of the business strategy to reduce the exposure in the corporate advances, the bank has brought down the share of corporate advances from 30.83 per cent as on September 30, 2019 to 25.10 per cent as on September 30, 2020.

He added that the growth in the desired portfolios and the reduction in the corporate exposure has further strengthened the balance sheet. The bank has also been able to meet the targeted levels of recovery/upgrades which has helped in containing the GNPA level. The provision coverage ratio has improved markedly to 65.21 per cent from 48.07 per cent.

The Capital Adequacy Ratio stands comfortable at 13.94 per cent as on September 30. The bank has taken approval from the shareholders for raising the equity capital during the financial year for an amount not exceeding ₹750 crore.