Tamilnad Mercantile Bank Sets Ambitious Growth Targets for FY27, Reports Strong Q2 Performance

Tamilnad Mercantile Bank (TMB), a prominent player in the Indian banking sector, has unveiled ambitious growth projections for fiscal year 2027 while reporting robust financial results for the second quarter of fiscal year 2026.

Growth Projections for FY27

TMB has set its sights on achieving a total business of ₹1.40 lakh crore by FY27, coupled with a 2.00% return on assets (ROA). The bank plans to expand its branch network to over 700 branches, signaling a strong focus on physical presence and customer accessibility.

In terms of asset quality, TMB aims to maintain its gross non-performing assets (GNPA) near 1%, reflecting the bank's commitment to prudent risk management. Additionally, the bank expects to boost its current account savings account (CASA) ratio above 30%, which could potentially lead to lower cost of funds and improved profitability.

Q2 FY26 Financial Performance

TMB's recently released financial results for Q2 FY26 demonstrate the bank's solid performance and progress towards its long-term goals:

Key Metrics	Q2 FY26	Q2 FY25	YoY Change
Net Profit	₹317.51 crore	₹303.18 crore	4.73%
Total Income	₹1,621.46 crore	₹1,564.88 crore	3.62%
Net Interest Income	₹597.13 crore	₹596.06 crore	0.18%
GNPA Ratio	1.01%	1.37%	-36 bps
NNPA Ratio	0.26%	0.46%	-20 bps
Capital Adequacy Ratio	30.96%	29.59%	137 bps

The bank reported a net profit of ₹317.51 crore for Q2 FY26, marking a 4.73% increase from the same quarter last year. Total income rose by 3.62% year-on-year to ₹1,621.46 crore, while net interest income remained relatively stable at ₹597.13 crore.

TMB's asset quality showed significant improvement, with the GNPA ratio decreasing from 1.37% in Q2 FY25 to 1.01% in Q2 FY26. The net NPA ratio also improved, dropping from 0.46% to 0.26% over the same period.

The bank's capital position remains strong, with the Capital Adequacy Ratio under Basel III norms standing at 30.96%, well above regulatory requirements and up from 29.59% in the previous year.

Operational Highlights

TMB's operational metrics also showed positive trends:

Total business grew by 11.40% year-on-year to ₹1,02,351 crore.
Deposits increased by 12.32% to ₹55,421 crore.
Gross advances rose by 10.34% to ₹46,930 crore.
The CASA ratio improved to 27.36%, up from 27.12% in the previous quarter.

Digital Initiatives

The bank continues to focus on digital transformation, with several key initiatives underway:

Implementation of a new Internet Banking Application and Digital Engagement Hub.
Enhancements to Mobile Banking and UPI services.
Introduction of a new state-of-the-art AI-powered call center facility.
Collaboration with fintech partners to expand digital offerings.

These initiatives align with TMB's strategy to balance its traditional branch-based services with modern digital banking solutions.

As Tamilnad Mercantile Bank progresses towards its FY27 targets, the bank's focus on expanding its branch network, improving asset quality, and enhancing digital capabilities positions it well for future growth in the competitive Indian banking landscape.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+1.59%	+2.30%	+8.11%	+2.73%	+5.94%	-10.27%

Tamilnad Mercantile Bank (TMB) has reported a 4.7% increase in net profit for the second quarter of the financial year 2025-26, alongside changes in its board composition. The bank's financial performance and governance updates highlight its steady growth and adherence to regulatory requirements.

Financial Performance

TMB's financial results for Q2 FY2025-26 show a modest improvement in profitability:

Particulars (₹ in lakhs)	Q2 FY2025-26	Q2 FY2024-25	YoY Change
Net Profit	31,751.00	30,318.00	4.7%
Operating Profit	45,243.00	46,520.00	-2.7%
Total Income	162,146.00	156,488.00	3.6%
Net Interest Income	59,713.00	59,606.00	0.2%

The bank's net profit for the quarter ended September 30, 2025, stood at ₹31,751.00 lakhs, up from ₹30,318.00 lakhs in the same quarter of the previous year. This represents a year-on-year growth of 4.7%. The total income for Q2 FY2025-26 increased by 3.6% to ₹162,146.00 lakhs, compared to ₹156,488.00 lakhs in Q2 FY2024-25.

Asset Quality and Capital Adequacy

TMB's asset quality showed improvement:

Gross Non-Performing Assets (NPA) ratio decreased to 1.01% as of September 30, 2025, from 1.37% a year ago.
Net NPA ratio improved to 0.26%, down from 0.46% in the previous year.
The Provision Coverage Ratio (PCR) strengthened to 74.36% without technical write-off.

The bank maintains a robust capital position with a Capital Adequacy Ratio of 30.96% under Basel III norms, well above the regulatory requirements.

Board Changes

TMB announced the completion of tenure for two Non-Executive Directors:

Thiru S.R. Ashok (DIN – 07933713)
Thiru D.N. Nirranjan Kani (DIN – 00455352)

Both directors completed their eight-year tenure as per Section 10A(2A) of the Banking Regulation Act, 1949, and ceased to be directors effective October 27, 2025.

Other Key Highlights

The bank's advances grew by 10.5% year-on-year to ₹4,658,982.00 lakhs.
Deposits increased by 12.3% to ₹5,542,076.00 lakhs compared to the previous year.
Return on Assets (ROA) for Q2 FY2025-26 stood at 1.85%.

TMB continues to maintain a provision of ₹25,000.00 lakhs to address any potential impact from the COVID-19 pandemic, demonstrating a cautious approach to risk management.

The bank's performance reflects its ability to navigate challenging market conditions while maintaining growth in key areas. The improvement in asset quality and strong capital position provide a solid foundation for future growth initiatives.