The corporate loan book of South Indian Bank is growing at a healthy pace of 47%, as the lender is focusing on going deep in the segment, Murali Ramakrishnan, MD & CEO, said in an interaction.
The lender is concentrating mainly on acquiring good quality assets as the share of loans disbursed to ‘A’-rated and above companies improved from 76% to 95% on a y-o-y basis. As of now, the corporate portfolio is around 31% of the total asset book, he said. The lender has a total loan book of Rs 70,117 crore as of December 31.
The bank is not worried about formation of chunky exposure as that will happen only if the corporate book is 50-60% of the total book, according to Ramakrishnan. Besides, the bank is constantly monitoring its corporate loan accounts and is sticking to the group exposure cap.
“It comes from careful monitoring of the portfolio. You do not get complacent only by adding good quality customer, you continue to work with them and ensure that the requirements are met by them also,” Ramakrishnan said.
For FY24, the bank has pegged a conservative overall credit growth at 10-12% despite the skyrocketing growth in loans in FY23. The bank saw advances growth of 18% in Q3FY23 while deposits grew by a mere 3% y-o-y to Rs 90,672 crore. The bank is comfortable as long as it maintains its current credit-deposit ratio of 77%, Ramakrishnan said.
The bank plans to add 10-15 branches a year despite having a robust gold loan portfolio, and aims to drive growth through its technology platforms. The lender spends around Rs 150-200 crore on technology per year or roughly 8-9% of its operating expenses, which is in line with major private sector banks, he said.
The bank reported a net profit of Rs 103 crore for Q3FY23, against a net loss of Rs 50 crore in the previous year. The profit was aided by an 88%
y-o-y drop in provisions to Rs 41 crore. The pre-provisioning operating profit stood at Rs 204 crore, lower by 27% y-o-y on account of a loss of Rs 34 crore in non-interest income thanks to a treasury loss of Rs 288 crore.
Net interest income rose 44% y-o-y to Rs 825 crore while net interest margin (NIM) expanded 88 bps to 3.52% as of December 31. The bank will be able to maintain the NIM at current levels in FY24, Ramakrishnan said.
The bank saw an improvement in the asset quality with gross non-performing asset (NPA) ratio declining by 108 bps y-o-y to 5.48%. The net NPA ratio fell by 126 bps to 2.26%.