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Emphasis on retail lending and low-cost deposits enabled South Indian Bank register an 19 per cent increase in its net profit in the second quarter of this fiscal.
The Kerala-based bank has achieved a net profit of ₹110.52 crore compared with ₹93.38 crore in the corresponding quarter of the previous fiscal.
According to VG Mathew, Managing Director and CEO, realignment of business strategies and the prominence given to retail lending and CASA (current and savings account) deposits contributed to the good performance, despite the challenging environment facing the banking sector on the asset quality front.
In the case of SIB, Mathewsaid the stress in corporate lending has come down substantially. On the issue of rise in bad loans, he said NPAs (non-performing assets) have been contained at 3.96 per cent in Q1 and Q2 of this fiscal. The year-on-year increase in NPAs, he said, was primarily because of the stress in the large corporate book.
The bank has consciously stayed away from this sector during the last two years and is focussing on tackling the existing stressed accounts. During the current fiscal, the bank has not sold any assets to ARCs (asset reconstruction companies).
In Q2, the total advances increased to ₹43,548 crore, registering a credit growth of 10.48 per cent. SME (small and medium enterprises), home, agriculture and auto loans were the growth drivers.
The deposits rose by ₹7,156 crore to ₹60,192 crore, a growth of 13.49 per cent. CASA deposits increased by ₹1,625 crore to ₹13,697 crore, a growth of 13.46 per cent. CASA now stands at 22.76 per cent of total deposits.
NRI deposits as a percentage of total deposit increased from 24.33 per cent to 25.71 per cent and NRI deposit rose by 19.92 per cent.
The total business increased by ₹11,369 crore to ₹1,04,620 crore, up 12.19 per cent. The capital adequacy ratio stood at 11.13 per cent as on September 30.
According to Mathew, the bank is exploring various options to infuse regulatory capital to support its growth plans.
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