South Indian Bank,Indian Bank
Kerala’s second largest private sector lender, South Indian Bank reported sequentially 3% lower total income of Rs. 1,299 crore, despite 11% QoQ higher net interest income of Rs. 364 crore, as other income nearly halved to Rs. 62 crore from Rs. 118 crore in Q1. Lower other income coupled with higher operating expenses lead to a spurt in cost-to-income ratio to 50.2% in Q1, which stood at 46.8% in Q1. Asset quality continues to be stressful, with net NPAs at Rs. 440 crore, up from Rs. 348 crore as of 30th June 2013, and rising to 1.4% of net advances, from 1.1% three months back. Thus, after a disappointing Q1, bank has not been able to shore up performance in Q2 either.
While total deposit growth was flat QoQ at Rs. 43,478 crore, advances grew 2% to Rs. 31,743 crore, as of 30th September 2013. CASA ratio showed some improvement to 21.3% (20.6% as of 30th June 2013) on back of 3% quarterly growth. The bank, with 775 branches of which 54% in Kerala alone, and 878 ATMs, reported healthy CAR as per Basel III of 12.97% against requirement of 9%. Its NIMs which had slipped in Q1FY14 to 2.93% from 3.21% in FY13, seem to be getting back on track with second quarter NIM at 3.06%. However, it is still not a reason enough to party.
H1 Net profit and EPS stand at Rs. 242 crore and Rs. 1.80 respectively. The bank with no identifiable promoter will be on the radar of foreign banks (if permitted by RBI) and domestic lenders as a potential M&A target. Share is currently ruling at PE and PBV of 5.4x and 0.8x.