South Indian Bank's Strategic Shift: Leveraging Loans for Higher Margins

South Indian Bank reported a 12% rise in quarterly net profit, driven by increased core net interest income and loan growth. The bank plans to enhance net interest margins by adjusting its loan mix, focusing on microenterprises and education loans. Its capital adequacy remains strong despite market fluctuations.

South Indian Bank unveiled a 12% boost in its December quarter net profit, reaching Rs 341.87 crore compared to Rs 305.36 crore a year ago. This growth is attributed to a 6.13% rise in core net interest income, totaling Rs 869.26 crore, even as net interest margins remained steady at 3.17% with loans expanding by 11.95%.

The bank's Managing Director, P R Seshadri, outlined a strategy aimed at increasing net interest margins by altering the loan portfolio. The focus will shift towards small ticket advances to micro, small and medium enterprises, international education loans, and mid-market housing sectors. While there is potential to grow the personal loan segment, the bank remains cautious due to prevailing industry challenges.

Despite a slight dip in gross non-performing assets to 4.30%, the bank saw a substantial 36% rise in provisions, reaching Rs 66.04 crore. With a capital adequacy ratio at a strong 18%, South Indian Bank is confident in its financial stability, eliminating the need for capital infusion over the next 18 months.

(With inputs from agencies.)