Tamilnad Mercantile Bank (TMB) has reported an impressive performance for the December 2020 quarter with a significant growth in net profit and better asset quality parameters.

For the quarter ended December 31, 2020, the Tuticorin-based bank’s net profit grew 96 per cent to ₹181 crore, compared to ₹92 crore in the year-ago quarter.

The operating profit of the company grew 37 per cent at ₹350 crore compared to ₹256 crore in Q3 of the previous fiscal, on the back of strong growth in net interest income that stood at ₹429 crore against ₹339 crore, an increase of 27 per cent. Total income grew by eight per cent at ₹1083 crore (₹999 crore).

Higher net interest income and lower provisions aided the strong growth in bottomline, said KV Rama Moorthy, Managing Director and CEO, TMB.

He said about 90 per cent of the customers in MSME segment saw business returning to pre-Covid levels, while several MSMEs in the agri-segment were doing much better than the pre-Covid period.

Gross NPAs

TMB had a gross NPA of ₹978 crore as of December 31, 2020. Its Gross NPA, as a percentage of total advances, dropped to 3.24 per cent as of December 2020 quarter from 5.16 per cent in December 2019 quarter. Net NPA reduced to 0.92 per cent (₹270 crore from 2.13 per cent (₹564 crore).

The bank has an additional Standard Assets Provision of ₹150 crore plus ₹3.80 crore for 90 DPD accounts in respect of Covid-stressed accounts, in line with the Supreme Court directives for standstill clause.

“Covid is still not over. While it has created a lot of challenges, the pandemic has also thrown up new opportunities. For instance, we never did anything in healthcare and pharma sectors. With stronger focus from the government, we may look at this segment going forward,” said Moorthy.

For nine-month period ended December 2020, the net profit of the bank grew to ₹422 crore against ₹243 in the year-ago period, an increase of 73 per cent. Operating profit grew 34 per cent at ₹932 crore (₹695 crore).

Total deposits

Total advances grew 10 per cent to ₹30,212 crore from ₹27,369 crore. Total deposits stood at ₹37,889 crore (₹35,174 crore). Provision coverage ratio of the bank grew to 89.31 per cent (78.57 per cent). Its net worth stood at ₹4404 crore (₹3817 crore).

Moorthy said TMB is hopeful achieving its targets for FY21 – net profit of ₹480 crore and total business of ₹72,500 crore (₹32,000 crore of advances and ₹40,500 crore of deposits).

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