South Indian Bank's NII for Q4FY18 has improved by 12.1% yoy to Rs492.2cr as against Rs439.1cr yoy. The bank has reported net profit above estimates at Rs114.1cr in Q4FY18, against profit of Rs75.5cr reported in corresponding quarter last year, which is a growth of 51.1% yoy. Its GNPA for Q4FY18 stood at 3.59% against 3.4% qoq, which has increased by 19bps. NNPA for the quarter came at 2.6% against 2.35% qoq, which has increased by 25bps.
FY18 advances growth at ~17% yoy. During Q4FY18 advances grew by 17% to Rs55,109cr.
Loan growth during the quarter was, largely driven by SM , mortgage, agri and retail loans. Management aims to achieve loan growth at 18% levels in FY19E, driven by MSME and retail business.
For FY18 the bank's loan book break-up is as follows Corporate - 37.09%, Retail ex gold - 22.56%, Gold - 2.46%, SME - 23.53%, Agri - 14.37%.
Retail (excluding Gold), SME and Agriculture loan book growth at ~20% yoy.
Gold loans is expected to come back to 20% growth in FY19E.
As of FY18 end 78% of bank’s Corporate Loan Book is Investment Grade, whereas ~22% has been rated as below BBB rating.
The corporate book with exposure of >Rs25cr now stands at Rs18,560cr largely contributed by Financial Intermediaries (23%) primarily NBFCs, Infra – 15% , metal 6% among others.
Total deposits as of FY18 end stood at Rs72,030cr, which is up by 9% yoy. CASA deposits too have improved by 9% yoy to Rs17,142cr.
CASA ratio for the quarter came at 23.8% and the management targets 30% CASA ratio by the year 2020 due to its focus on Institutional CASA, Salaried CASA and Government.
NIM’s for the quarter came at 2.7% and management expects NIMs to remain almost same for FY19E. For FY20E, the bank is targeting NIM of 3%.
There was some pressure on yields given focus on higher collateral, has led to competitive pricing. Funding cost benefitted during the quarter due to run-down in higher cost deposits.
The bank has Zero accounts in its watchlist of Large Corporate Loan Book.
Fresh slippages during the quarter was Rs98cr, but devolvement of Non-Fund based exposure (Pharma sector) of Rs152cr led to higher slippages. The bank is already carrying >50% provisions on this and made additional provisions to have 100% coverage on this account.
Slippages rose yet again to 4% due to higher stress in the corporate book (>75% of slippages), exacerbated by RBI’s recent recognition norms.
The bank utilised RBI’s dispensation in MTM on bonds, gratuity limits and NCLT provisions, which restricted credit cost and has reached 40% PCR on secured exposures by FY18, remaining to be done by 1QFY19E.
Restructured book at Rs248cr, contains 2 annuity based road projects worth Rs190cr have slipped to NPA during the quarter, which were part of restructured standard book.
The banks SR book outstanding is at Rs1,356cr, against which it has done the provision of Rs261cr.
The 4 accounts have been slipped from corporate book of which 2 are from restructured standard book, in Q4FY18.
The bank has exposure of Rs660cr towards NCLT list for which they have been provided to the extent of 41%. The management is guiding for Rs600cr slippages and credit cost of ~1% for FY19E.
Of the Rs408cr deductions from Gross NPA breakup is - Rs165cr to ARC sales, Rs29cr is cash recovery, Rs53cr is upgrades and Rs162cr is writeoffs during the quarter.
Divergence of Rs154cr was the non-funded part where they have provided 100% and sold to ARC.
The banks CRAR for Q4FY18 end stood at 12.7%, out of which Tier I capital stood at 10.41%. The PCR for the bank came at 41.2% during the quarter.
The banks total branches as of Q4FY18 end stood at 854, out of which rest of India branches are at 142. The bank is likely to open 15 new branches in FY19E (5 in AP and 10 in rest of India).
South Indian Bank Ltd is currently trading at Rs. 27.25, up by 1.7 points or 6.65% from its previous closing of Rs. 25.55 on the BSE.
The scrip opened at Rs. 25.80 and has touched a high and low of Rs. 27.30 and Rs. 24.45 respectively. So far 3,63,43,710 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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