South Indian Bank has released its financial results for the second quarter, showcasing steady growth in profitability despite challenges in the interest rate environment.

Key Financial Highlights

Performance Analysis

South Indian Bank has demonstrated resilience in its Q2 performance, with net profit rising to ₹351.00 crores, an 8% increase from the ₹325.00 crores reported in the same quarter of the previous fiscal year. This growth comes despite a compression in the bank's net interest margin (NIM), which reached 2.8% during the quarter.

The bank's management believes that this NIM level represents the trough of the interest rate cycle, suggesting potential for improvement in the coming quarters. Total deposits grew by 10% year-on-year to ₹115,635.00 crores, while advances increased by 9% to ₹92,286.00 crores, indicating steady expansion of the bank's business.

Asset Quality Improvement

A significant highlight of the quarter was the marked improvement in asset quality:

• Gross Non-Performing Assets (NPA) ratio decreased to 2.93% from 4.40% year-on-year
• Net NPA ratio declined to 0.56% from 1.31% in the previous year

This substantial reduction in NPAs reflects the bank's effective strategies in managing credit quality and recovering problematic assets.

Strong Capital Position

South Indian Bank maintains a robust capital position:

• Capital Adequacy Ratio (CAR): 17.70%
• Tier-1 Capital Ratio: 16.79%

These figures indicate the bank's strong ability to absorb potential losses and support future growth.

Segment-wise Performance

The bank has shown significant growth across various loan segments, with particularly strong performance in MSME and retail loan disbursements.

Future Outlook

Management has outlined several strategic objectives for the near future:

1. Expectation of NIM recovery from current levels
2. Plans to reduce corporate advances from 40% to one-third of the total book over the next 18 months
3. Aim to grow retail and MSME segments at 20%+ annually

These strategies indicate a shift towards a more retail-focused lending approach, which could potentially lead to improved margins and reduced concentration risk in the corporate sector.

South Indian Bank's Q2 results demonstrate a balanced approach to growth, with improvements in profitability and asset quality, despite margin pressures. The bank's focus on retail and MSME segments, coupled with its strong capital position, positions it well for future growth in a dynamic banking environment.

South Indian Bank (SIB) has reported its highest-ever quarterly net profit of ₹351.36 crore for Q2 FY2025-26, marking an 8% increase from ₹324.69 crore in the same quarter last year. This performance underscores the bank's strategic focus on profitability through quality credit growth and robust risk management.

Key Financial Highlights

Strategic Growth in Key Segments

SIB has reported significant growth across various business segments:

• Retail Deposits: Grew by 11% to ₹112,625 crore
• NRI Deposits: Increased by 9% to ₹33,195 crore
• Gross Advances: Rose by 9% to ₹92,286 crore
• Gold Loan Portfolio: Expanded by 13% to ₹18,845 crore
• Housing Loans: Surged by 25% to ₹8,849 crore

Focus on Retail and MSME Sectors

The bank aims to sustain credit growth of over 20% by focusing on retail and MSME segments. This strategy aligns with SIB's goal of diversifying its loan book and reducing dependence on corporate lending. The MSME segment, in particular, saw a remarkable 127% year-on-year growth in disbursements.

Digital Transformation and Operational Efficiency

SIB is leveraging its robust CASA (Current Account Savings Account) deposits and digital transformation initiatives to drive long-term profitability. The bank reported that 98.44% of its transactions are now conducted through digital channels, indicating a strong push towards operational efficiency.

Asset Quality Improvement

The bank's asset quality has shown significant improvement:

• Gross NPA ratio decreased by 147 basis points to 2.93%
• Net NPA ratio dropped by 75 basis points to 0.56%
• Provision Coverage Ratio (including write-offs) increased to 90.25%

Capital Adequacy and Future Outlook

SIB's Capital Adequacy Ratio stood at 17.70% as of September 2025, well above the regulatory requirement. This strong capital position provides a solid foundation for future growth and expansion.

P R Seshadri, MD & CEO of South Indian Bank, stated, "The Bank's well-defined strategy continues to underpin its strong business performance during the period. We recorded healthy growth across all major segments – including Corporate, MSME, Housing, Auto and Gold loans – with a steadfast focus on maintaining asset quality."

As South Indian Bank continues to execute its strategic plan, it appears well-positioned to capitalize on growth opportunities in the retail and MSME sectors while maintaining a prudent approach to risk management and asset quality.