South Indian Bank reported a record net profit of ₹1,455 crore in FY26, while gross advances grew 15% to cross the ₹1 lakh crore mark. MD & CEO PR Seshadri tells Narayanan V that the ongoing Gulf war could spur NRI deposit inflows, besides discussing the bank’s credit and deposit growth and the search for the next CEO. Edited excerpts: 

What factors led to record net profits in FY26?

Our main source of income, net interest income, has grown well on a quarter-on-quarter basis, up 4–5% (to ₹915 crore in Q4). Our portfolio earlier had a high concentration on the corporate side, which we have been addressing by originating more retail and small business loans, and that has worked. We have also been focusing on improving branch productivity over the last 2.5 years, and that is now showing results.

We also have a high-quality liability franchise. Our CASA balances grew 17.5% year-on-year (to ₹39,621 crore in Q4), which helped keep costs under control and supported profitability. Expense control has worked, and we had a second full year of positive operating leverage. All of this together enabled us to grow profits by 12% on an annualised basis and 19% year-on-year for the quarter.

Gross advances grew 15% to ₹1,00,274 crore. Which segments drove the growth?

The bank saw consistent growth across all targeted segments, with a strong focus on acquiring quality assets in corporate lending, MSME, auto loans, mortgage loans and gold loans. Corporate, however, we have deliberately not grown as fast as we could—this segment grew 7% to ₹38,670 crore. The personal loan segment grew 29% to ₹28,901 crore, while the gold loan portfolio grew 45.62% year-on-year to ₹24,729 crore. Vehicle loans grew 21.39% year-on-year from ₹1,987 crore to ₹2,412 crore.

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Are you seeing any stress in MSME portfolio due to the Gulf War?

As of now, we are not seeing any stress. SMA-1 across products is about 0.4% of advances as of March 2026 and SMA-2 is around 0.2%, so the portfolio is in good health. If geopolitical issues persist, there could be some impact in the medium term, and we will have to work with clients to address that.

The government has also announced a new credit guarantee programme, which we will be exploiting to ensure that we help our customers manage these difficult times. It is still early to identify where stress may emerge because the impact can be first-order, second-order and so on. In fact, some segments have benefited.

For instance, spinning mills in Tirupur and Coimbatore, which were under pressure earlier, are now seeing strong demand from China for yarn due to disruptions in cotton supply from Egypt. So, for now, we are closely monitoring and assessing which segments could be impacted.

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Has the geopolitical tensions impacted NRI deposit inflows?

Our NRI business has been growing at around 12–13%, and we are seeing significant inflows. At this point, it is difficult to fully assess how the situation will evolve and how it may impact behaviour. We hope the situation gets resolved without turning into a prolonged crisis.

Our view is that if the issue continues for some time, NRI balances could actually grow, as people in the Middle East may transfer money to safer destinations. The strong US dollar (around ₹95) will also work in our favour. Over time, these balances may stabilise, but for now we expect growth in NRI deposits. 

Your term ends in September. Has a successor been identified? 

I think the process is still underway. The board is actively engaged in to identify an appropriate candidate and I am sure at an appropriate point in time they will revert with a public update on what the outcomes are.