South Indian Bank reports Q2 net loss on higher bad loans

Kerala-based South Indian Bank (SIB) posted a net loss of Rs 187.06 crore during the second quarter (Q2) of the current financial year, as against a net profit of Rs 65.09 crore during the corresponding period of the previous year due to higher bad loans.

The bank declared an operating profit of Rs 111.91 crore for the Q2 FY 22 as against Rs 390.94 crore for the Q2 FY21. Murali Ramakrishnan, managing director and chief executive officer of the Bank, while announcing the results stated that the prevailing COVID Pandemic scenario in the country, impacted the growth in the Business and Personal loan segment. However, the Bank could register reasonable growth in the desired segments like well rated Corporates and Gold Loan portfolios during the period.

As per the recent RBI direction, provision for depreciation on investments amounting to Rs 175.56 crores for Q2 FY 22 has been shown under “other income” in the profit and loss account, which was originally classified under “provisions and contingencies”. Further, amounts recovered from written off accounts were reclassified under “provisions and contingencies” against previous year classification under “other income”. Excluding these amendments operating profit would have been Rs 346 crore.

The GNPA for the Bank improved by 137 bps to 6.65 per cent as at September 30, 2021 compared to 8.02 per cent as at June 30, 2021. CASA ratio for the Bank improved to 30.8 per cent as at September 30, 2021 compared to 27.8 per cent as at September.

During this quarter the Bank could improve the Provision Coverage Ratio to 65.02 per cent as on as against 60.11 per cent during the same time last fiscal. The Capital Adequacy Ratio of the Bank stands at 15.74 per cent as on September 30, 2021.

Murali added that the Bank has seen major shifts over the last one year in the key functional areas including major strides in digital banking, setting up vertical asset structure, revamping branch structure to bring efficiencies, developing new business sourcing channels, strengthening data science capabilities, employee engagement and motivation and robust recovery mechanism.