South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality
Company Name: South Indian Bank Ltd | NSE Code: SOUTHBANK | BSE Code: 532218 | 52 Week high/low: 36.9 / 22.3 | CMP: INR 26.8 | Mcap: INR 7,014 Cr | P/BV – 0.79
NII Moderate; strong Profitability; NIMs flat; Asset quality improved
About the Stock
➡️South indian bank is private sector bank operate in south region of India headquartered in kerala. The bank has 950 branch network and majority situated in south India. The customer bas has increased from 7.3 Mn to 7.8 Mn within one year period. The bank loan book is well diversified 40% with corporate and remaining 60% retail book includes perosnal, agri and business.
Strong growth in Advances and Disbursement in Q3FY25
➡️The bank has reported strong growth annually in key business parameter. Gross Advances grew 12% YoY to 86,966 Cr, with corporate segment contributing 40% of the loan book, growing at 17% and personal segment contribute 26%, growing at same pace 26% while business loan and Agriculture contribute 15% and 19% respectively.
➡️Disburement grew 86% YoY to 1,22,572 Cr led by corpoarte book. While the bank deposit lagging behind, increased by 6% YoY and borrowings decline 30% YoY. The CASA stand at 31.15% in Q2FY25 lower by 65 bps YoY.
➡️Personal segment loan book driven by growth in mortgage loan at 79% folowed by home loan loan at 64%, gold loan 10%, auto loan 25% and credit card 4%.
➡️Retail disbursement momentum help by home loan, auto loan while agriculture and personal loan remian flat annually.
| Book Growth (As on) | Q3FY25 | Q3FY24 | YoY (%) | Q2FY25 | QoQ (%) |
| Advances | 86,966 | 77,686 | 12% | 84,714 | 3% |
| Disbursement | 1,22,572 | 65,805 | 86% | 76,872 | 59% |
| Borrowings | 2,956 | 4,213 | -30% | 2,609 | 13% |
| Deposit | 1,05,387 | 99,155 | 6% | 1,05,452 | 0% |
NII growth moderate while PAT jump 12% led by lower opex and tax expense
➡️Interest income increased by 9% YoY (+1% QoQ) to 2,371 Cr driven by yield expansion and advance growth. The yield on loan expand 11 bps YoY to 7.64% while Cost of fund jump 13 bps to 4.84% result contraction in NIMs.
➡️NII grew moderate at 6% YoY (-1% QoQ) to 869 Cr due to high expansion in CoF makes NIMs flat.
➡️The bank’s PAT surged 12% YoY (+5% QoQ) to 342 Cr led by lower operating cost and tax expense despite the jump in credit cost. The stable the employee cost and total operating cost kick in operating leverage and boost the profitability.
| Years | Q3FY25 | Q3FY24 | YoY (%) | Q2FY25 | QoQ (%) |
| Interest income | 2371 | 2184 | 9% | 2,355 | 1% |
| Interest expenses | 1501 | 1365 | 10% | 1,472 | 2% |
| NII | 869 | 819 | 6% | 882 | -1% |
| Other income | 447 | 452 | -1% | 449 | -1% |
| Total Net income | 1316 | 1271 | 4% | 1,332 | -1% |
| Employee expenses | 415 | 460 | -10% | 421 | -2% |
| Other OpEx | 373 | 328 | 13% | 360 | 3% |
| Total Opex | 788 | 788 | 0% | 782 | 1% |
| PPOP | 529 | 483 | 9% | 550 | -4% |
| Provision | 66 | 49 | 36% | 110 | -40% |
| PBT | 463 | 435 | 6% | 440 | 5% |
| Tax expenses | 121 | 130 | -7% | 116 | 5% |
| Tax rate | 0 | 0 | -12% | 26% | 0% |
| PAT | 342 | 305 | 12% | 325 | 5% |
| PAT% | 12% | 12% | 5% | 12% | 5% |
| EPS | 1.31 | 1.46 | -10% | 1.24 | 5% |
| No. of equity shares | 262 | 209 | 25% | 261 | 0% |
Asset quality enhanced; stress book reduce
➡️Company has reduced the stress assets from 894 Cr in Q3FY24 to 404 Cr in Q3FY25. Bank has churned 78% of overall loan book since covid level and 91% current GNPA from old book. GNPA/NNPA stood at 4.43%/1.25% decline by 44bps/36 bps YoY (10bps/6 bps QoQ). Slippages ratio decline to 0.33% in Q3FY25 vs 0.34% in Q3FY24. The provision coverage ratio expand 310 bps YoY to 81.07% vs 77.97% in Q3FY24.
| Asset Quality | Q3FY25 | Q3FY24 | YoY (bps) | Q2FY25 | QoQ (bps) |
| GNPA | 4.3 | 4.74 | -44 | 4.40 | -10 |
| NNPA | 1.25 | 1.61 | -36 | 1.31 | -6 |
Valuation and Key metrics
➡️Currently the stock is trading at 0.79 price to book value. The yield on advances jump 11 bps to 7.64% while CoF up by 13 bps YoY to 4.84%. This result in flat in NIMs at 3.19%. The increased in deposit rate to maintain and increased the deposit growt led to higher CoF and contract NIMs as Yield is stable.
| Key metrics | Q3FY25 | Q3FY24 | YoY (bps) | Q2FY25 | QoQ (bps) |
| Yield | 7.64 | 7.53 | 11 | 7.68 | -4 |
| CoF | 4.84 | 4.71 | 13 | 4.80 | 4 |
| NIMs | 3.19 | 3.19 | 0 | 3.24 | -5 |
| ROA | 1.12 | 1.07 | 5 | 1.07 | 5 |
| ROE | 13.93 | 16.38 | -245 | 13.71 | 22 |
| CASA | 31.15 | 31.8 | -65 | 31.8 | -65 |
| PCR | 81.07 | 77.97 | 310 | 80.72 | 35 |
| CAR | 18 | 15.6 | 240 | 18.04 | -4 |
The image added is for representation purposes only
