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SMR
07-22-2015, 06:42 AM
South Indian Bank Limited is an India-based bank, which provides personal banking, NRI banking and Business banking services. The Bank operates in four segments. The Treasury services segment primarily consists of interest earnings on investments portfolio of the bank, and earnings from foreign exchange business. The Corporate / Whole sale Banking segment provides loans and other banking services to corporate segment. Revenues of this segment consist of interest earned on Loans made to Corporate customers and the charges / fees earned from other banking services. The Retail Banking segment provides loans and other banking services to non-corporate customers. Revenues of this segment consist of interest earned on Loans made to non-corporate customers and the charges / fees earned from other banking services. Other Banking Operations includes income from para banking activities, such as debit cards, and third party product distribution.

Official website:www.southindianbank.com

SMR
07-22-2015, 06:44 AM
South Indian Bank has reported a weak set of numbers for 1QFY2016. Its PAT for the quarter declined by 48.4% yoy, primarily on account of lower net interest income (NII) and lower other income. Advances growth improves, however NIM falls qoq During 1QFY2016, the bank’s advances and deposits grew at a moderate pace of 11.6% and 12.6% yoy, respectively. Within advances, the SME+Agri loan book grew at a healthy pace, ie at 24.9% yoy, while the corporate book grew by 16.9% yoy. Retail advances continued to dip; they declined by 8% yoy as Gold loans fell by 27% yoy. The Management expects gold loans to pick up pace and has guided for a 20% yoy growth for FY2016. CASA deposits grew by 14% yoy with the CASA ratio improving to 22.3%. The Reported NIM for the bank fell by 16bp qoq to 2.5% and going forward, the Management expects it to increase to 2.85% in FY2016 with improving CASA ratio and repricing of deposits at lower rates. Growth in Other income (excl. Treasury income) was healthy at 19.1% yoy; however treasury income de-grew during the quarter, leading to a 14.3% yoy decline in non-interest income. Employee expenses went up by 7.9% yoy. The bank will be adding only 175 employees in FY2016 and targets cost to income to be around 55% in FY2016. On the asset quality front, the Gross NPA ratio increased by 14bp qoq to 1.85%, while the Net NPA ratio came in at 1.21% as compared to 0.96% in 4QFY2015. Slippages during the quarter were higher at Rs175cr; the major contributors were a food processing account (to the tune of Rs60cr) and a textile account (Rs28cr). The PCR (including technical write-offs) for the bank fell by 450bp qoq to 56.13%. The bank has restructured 1 steel account worth Rs100cr with outstanding standard restructured book at Rs2,170cr. Going forward, the Management expects the Gross NPA ratio to be around 1.7% in FY2016. Outlook and valuation: Asset quality issues continue to be a concern for the bank. Going forward, due to weak outlook on asset quality and subdued margin for the bank, we recommend a Neutral rating on the stock. At CMP, the stock trades at 0.8x FY2017E ABV.

Source: http://www.angelbroking.com