Tamilnad Mercantile Bank (TMB) is targeting a 15–18% growth in gross advances in FY26, driven by strong traction in the retail, agriculture and MSME (RAM) segments, along with a sharper focus on gold loans.
“On the asset side, the bank has been verticalised into four segments,” MD & CEO Salee S Nair said at the post-Q4 and FY25 earnings media briefing. He added that the four segments —MSME, gold loans, retail (housing and car loans), and trade finance—each are created with clear budgetary targets and dedicated resources to drive growth.
The lender posted its highest yearly net profit of Rs 1,183 crore in FY25, while gross non-performing assets (GNPA) declined to a 10-year low of 1.25%.
Nair said the bank is actively re-engaging with previously lost customers through an enhanced relationship management team focused on retail and MSME clients.
TMB’s total business grew 9.58% year-on-year to Rs 98,055 crore in FY25, with total advances at Rs 44,366 crore. The RAM portfolio contributed 93% of the advances. “Gold loans have been a key driver and we expect that momentum to continue,” Nair said.
The gold loan book rose to Rs 18,000 crore in FY25, up from around Rs 14,000 crore in FY24. The bank’s loan-to-value ratio on gold loans stands at 66%, well below the regulatory cap of 75%.
“We have substantial cushion available even if the gold loan price takes a turn for worse,” he said.
Net interest margin (NIM) moderated to 4.07% in FY25 from 4.11% in the previous year. Nair attributed the dip to rising deposit costs, which increased by 17 basis points, while yield on advances rose by only 7 basis points. For FY26, NIM is expected to be in the 3.80-3.90% range.
“We anticipate sourcing quality advances and a bit of pricing advantage that will help on the yield on advances,” Nair said.
Deposits grew 8.43% year-on-year to Rs 53,689 crore, with the CASA ratio at 26.44%. To boost low-cost deposits, the bank has set up a dedicated Transaction Business Group in the previous quarter. “We expect the CASA ratio to improve by at least a percentage point and stabilise between 29–30% in the long run,” Nair said.
He added that the bank expects the cost of funds to decline to 5.8–5.9% in FY26, from 5.93% in FY25, factoring in potential rate cuts. Shares of TMB closed 3% higher on the NSE at Rs 455.