South Indian Bank shares surged 3.75% to ₹44.05 on Friday following the release of strong Q3FY26 results. The Thrissur-headquartered private sector bank delivered its strongest quarterly performance with a record net profit of ₹374.32 crores, representing a 9.40% growth compared to ₹341.87 crores in Q3FY25. The nine-month net profit also increased by 9% to ₹1,047.64 crores for the period ended December 2025.

Strong Operational Performance

The bank's operational metrics demonstrated robust growth across key parameters. Pre-provisioning operating profit increased by 10.40% from ₹528.84 crores in Q3FY25 to ₹584.33 crores in Q3FY26. Non-interest income showed particularly strong momentum, rising 19% year-on-year from ₹409.22 crores to ₹485.93 crores, while net interest income grew marginally by 1.30% to ₹881.00 crores.

The bank maintained positive operating leverage for the nine-month period ended December 2025, with net total income increasing 7.44% compared to a 3.61% rise in operating expenses versus the corresponding period in the previous year.

Significant Asset Quality Improvement

South Indian Bank achieved substantial improvements in asset quality metrics during the quarter. Gross NPA ratio declined significantly by 163 basis points from 4.30% to 2.67% on a year-on-year basis, while net NPA ratio dropped by 80 basis points from 1.25% to 0.45%. This improvement highlights the bank's stronger credit management and reduced risk exposure.

The provision coverage ratio excluding write-offs increased by 1,177 basis points from 71.73% to 83.50% year-on-year, while PCR including write-offs rose by 1,050 basis points from 81.07% to 91.57%.

Robust Business Growth

The bank demonstrated strong growth across its deposit and advance portfolios. Gross advances grew by ₹9,798 crores from ₹86,966 crores to ₹96,764 crores, showing an 11% increase year-on-year. Retail deposits expanded by ₹13,142 crores from ₹1,02,421 crores to ₹1,15,563 crores, registering 13% growth.

Advances Portfolio Growth

The bank achieved broad-based growth across multiple lending segments:

The gold loan business, which accounts for 22% of gross advances, expanded 26% to ₹20,952 crores. The corporate loan segment with 40% weightage rose 10% to ₹38,353 crores. A and above rated Corporate Advances rose by ₹3,560 crores from ₹21,068 crores to ₹24,628 crores.

Deposit Performance

CASA deposits grew by 15% year-on-year, with savings bank deposits increasing 14% and current account deposits rising 20%. The CASA ratio improved to 31.84% from 31.15% in the previous year.

Technical Analysis and Market Performance

From a technical perspective, the stock shows strong bullish indicators with a 14-day RSI of 62.60, indicating healthy momentum without being overbought. The stock is currently trading above all eight simple moving averages, signaling a strong bullish trend and positive market sentiment.

Management Commentary and Capital Position

MD & CEO P. R. Seshadri highlighted that the bank's well-defined strategy continues to drive strong business performance, with healthy growth across corporate, MSME, housing, auto and gold loan segments while maintaining focus on asset quality. He emphasized the bank's strategic approach of achieving profitability through quality credit growth by onboarding fresh advances with low risk profiles.

The bank maintained a strong capital position with a Capital Adequacy Ratio of 17.84% as of December 2025, demonstrating sound capital management practices and capacity to support future business growth. The financial results include performance of the bank's wholly owned subsidiary SIBOSL.

South Indian Bank delivered its strongest quarterly performance to date, reporting a record net profit of ₹374.32 crores for Q3FY26, representing a 9% increase from ₹341.87 crores in the corresponding quarter of the previous fiscal year. The Kerala-based private sector bank's nine-month net profit also grew 9% to ₹1,047.64 crores compared to ₹960.69 crores in the same period last year.

Strong Operational Performance

The bank's operational metrics demonstrated robust growth across key parameters. Pre-provisioning operating profit increased 10% year-on-year to ₹584.33 crores from ₹528.84 crores in Q3FY25. Non-interest income showed particularly strong momentum, rising 19% to ₹485.93 crores from ₹409.22 crores in the previous year.

The bank maintained positive operating leverage for the nine-month period ended December 2025, with net total income increasing 7.44% while operating expenses rose only 3.61% compared to the corresponding period in the previous year.

Significant Asset Quality Improvement

South Indian Bank achieved substantial improvements in asset quality metrics during the quarter. Gross non-performing assets (NPA) declined significantly by 163 basis points to 2.67% from 4.30% on a year-on-year basis. Net NPA showed an even more impressive improvement, dropping 80 basis points to 0.45% from 1.25% in Q3FY25.

The provision coverage ratio excluding write-offs increased substantially by 1,177 basis points to 83.50% from 71.73%, while the provision coverage ratio including write-offs rose 1,050 basis points to 91.57% from 81.07%. The slippage ratio also improved, declining 17 basis points to 0.16% from 0.33% in Q3FY25.

Robust Business Growth

The bank's deposit base showed strong expansion with retail deposits growing 13% to ₹1,15,563 crores from ₹1,02,421 crores year-on-year. NRI deposits increased 9% to ₹33,965 crores from ₹31,132 crores. The current account and savings account (CASA) portfolio grew 15% year-on-year, with savings bank deposits rising 14% and current account deposits increasing 20%.

Gross advances expanded 11% to ₹96,764 crores from ₹86,966 crores, driven by growth across multiple segments. The corporate segment increased 10% to ₹38,353 crores from ₹34,956 crores, with A-rated and above corporate advances rising to ₹24,628 crores from ₹21,068 crores. The gold loan portfolio showed exceptional growth of 26% to ₹20,952 crores from ₹16,966 crores, while vehicle loans grew 24% to ₹2,393 crores from ₹1,938 crores.

Management Commentary and Capital Position

MD & CEO P. R. Seshadri highlighted that the bank's well-defined strategy continues to drive strong business performance. He emphasized the bank's strategic focus on achieving profitability through quality credit growth, successfully onboarding fresh advances with low risk profiles while maintaining prudent risk management practices.

The bank's capital adequacy ratio stood at 17.84% as of December 2025, indicating a strong capital position that supports future business growth. The return on assets continued to remain above 1%, demonstrating efficient asset utilization. South Indian Bank operates 948 branches, 2 ultra small branches, 3 satellite branches, 1,143 ATMs, and 126 cash recycling machines across India, along with a representative office in Dubai, UAE.