South Indian Bank Q2 profit falls 23% at Rs 65 crore

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South Indian Bank (SIB) on Thursday reported a 23% year-on-year decline in its net profit for the second quarter at Rs 65.09, mainly on additional provisioning. The Kerala-based lender had reported a net profit of Rs 84.48 crore in the year-ago period.

SIB has increased its provisioning for bad loans to Rs 326 crore from Rs 320 crore as of September-end last year. Operating profit for the second quarter has grown from Rs 411.45 crore to Rs 413.97 crore.

Gross NPA of the bank stands at 4.87% as against 4.92% last year and net NPA improved to 2.59% as against 3.48% in the year-ago period.

Murali Ramakrishnan, who had recently taken charge as MD & CEO of the bank, while announcing the results, mentioned that despite reduction in profit from treasury segment, the bank could register a net profit of Rs 65.09 crore for the quarter, mainly on account of the higher net interest income due to reduction in the cost of deposits and improved recoveries.

The net interest income improved from Rs 584.30 crore to Rs 663.11 crore during the quarter, registering a growth of 13% year-on-year. Net interest margin improved from 2.61% to 2.78%.

Ramakrishnan said that despite the Covid-19 pandemic scenario in the country, the bank could register a reasonable growth. He added that the bank has also been able to meet the targeted levels of recovery which has helped in containing the GNPA level. The provision coverage ratio of the bank has improved markedly to 65.21% from 48.07% year-on-year.

The capital adequacy ratio of the bank stands at 13.94% as on September 30, 2020. The bank has also taken approval from the shareholders for raising the equity capital during the financial year for an amount not exceeding Rs 750 crore, bank sources said.

SIB had reported 11% growth in its net profit at Rs 81.65 crore for the first quarter of the current fiscal.