South Indian Bank (SIB) posted a solid financial performance for the second quarter of the fiscal year 2023-24, as reported on Friday. The bank's net profit surged by 23.2% to Rs. 275 crore, compared to the same period in the previous year. Simultaneously, its operating profit saw an 8.2% increase, reaching Rs. 460 crore.
According to InvestingPro data, the bank's market capitalization is adjusted at 272.18M USD, with a P/E ratio of 12.29, indicating its relatively low earnings multiple. This aligns with one of the InvestingPro Tips, which notes that SIB is trading at a low earnings multiple.
Key financial indicators of the bank also showed positive trends. Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) improved by 71 basis points (bps) and 81 bps respectively. The bank's net interest income rose by 14.3% to Rs. 830 crore, while the net interest margin improved by 35 bps.
SIB reported growth in different segments of its business. Retail and NRI deposits grew by 7.3% and 4.7% respectively, contributing to an overall Current Account Savings Account (CASA) growth of 1.8%. Gross advances increased by Rs. 6,984 Crore, primarily driven by a 33.2% growth in the corporate segment, particularly in well-rated borrower accounts.
The bank's personal loan book and gold loan portfolio expanded significantly, with growth rates of 48.1% and 16.2% respectively. Credit card issuance exceeded three lakh, leading to an outstanding book of Rs. 1,164 Crore as at September 2023.
The bank's capital adequacy improved to 16.69% in September 2023, partly due to contributions from its wholly owned subsidiary SIBOSL. Additionally, the bank's return on equity and return on assets improved by 262 bps and 20 bps respectively. As per InvestingPro data, the bank has a return on assets of 0.61%.
Recovery in NPA accounts increased to Rs. 475 Cr in Q2 FY24, with a significant share of A and above rated accounts at 96.1% in large corporate segments.
Mr. P R Seshadri, MD & CEO of South Indian Bank, attributed the robust performance to the bank's strategic intent of "Profitability through quality credit growth". He highlighted the low-risk profile of its fresh advances portfolio, which comprises around 64% of total advances since October 2020.
InvestingPro Tips also suggests that SIB is a prominent player in the Banks industry with a high return over the last year and a strong return over the last three months. For more insightful tips like these, consider checking out InvestingPro, which offers access to an additional 12 tips specifically tailored for SIB.
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