South Indian Bank Ltd's Q2FY19 standalone net profit rises to Rs70cr vs. Rs4.3cr yoy: Misses Estimates

The bank’s standalone NII stood at Rs506.50cr, up 0.65% yoy and 2.48% qoq.

Oct 22, 2018 09:10 IST India Infoline Research Team

South Indian Bank Ltd Q2FY19

Standalone Results Q2FY19: ( cr)

Q2FY19 YoY (%)
NII 506.50 0.7
GNPA (%) 4.7 109
Provisions 205 [54.8]
Net Profit (adjusted) 70 1,520.4
***GNPA change in bps
South Indian Bank's NII for Q2FY19 came in flat at Rs506.5cr vs. Rs503.2cr yoy. The bank has reported net profit below consensus estimates. It has reported a PAT of Rs70cr in Q2FY19, against a profit of Rs4.3cr reported in the corresponding quarter last year. The yoy growth in PAT was due to lower provisions, which have declined ~55% to Rs205cr. Its GNPA for Q2FY19 stood at 4.61% against 4.54% qoq an increase of 6bps. NNPA for the quarter was 3.16% vs. 3.27% qoq, indicating a decline of 11 bps. 
  • SIB reported Q2FY19 PAT of Rs80cr (Q1FY19: Rs20cr), supported by controlled provisions of Rs210cr (-55% yoy), even as PPoP declined 32% yoy
  • Loan growth of 16% yoy was led by robust growth in retail (+19% yoy) and MSME (+7.2% yoy) loans, while the corporate book grew 13% yoy. Deposits rose 12% yoy, while the CASA ratio stood at 24.6%
  • Slippages declined sharply to Rs210cr (Rs610cr in Q1FY19), which included SME slippages of Rs110cr
  • SMA-2 stands at Rs2370cr (4.12%). The bank made a provision of Rs20cr toward infra groups (total exposure Rs400cr).
  • The bank guided for slippages of Rs500cr from SME and retail over H2FY19
  • The bank has Rs17,190cr of loans in the 12 affected areas in Kerala, of which loan accounts worth Rs10,030cr are affected due to floods
  • ~18 branches (in rural areas) are impacted due to floods, of which three branches have been shut down. The bank will have to incur some capex and opex to bring these branches back on track.
  • The bank expects Rs250cr (Rs500cr for next half year) of slippages from SME and retail loans.
  • Further, it expects to recover Rs200-300cr from the small and mid-corporate space.
  • This is including the impact of Kerala floods, but does not include slippages from the corporate portfolio as the bank expects that the corporate NPA cycle has peaked out.
  • SMA-2 for the bank stands at 4.12% (Rs2,370cr)
  • The bank has made a lumpsum provision toward Infra groups and does not have any exposure to power and energy
  • The management has guided for 20% loan growth and a CASA ratio of 30% for FY19

Technical View:

South Indian Bank Ltd ended at Rs. 12.60, down by 0.04 points or 0.32% from its previous closing of Rs. 12.64 on the BSE.
The scrip opened at Rs. 12.91 and touched a high and low of Rs. 13.12 and Rs. 12.45 respectively. A total of 3,26,44,482 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.

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