(PTI) South Indian Bank on Tuesday reported a net profit of ₹102.75 crore, restricted by money set aside as ageing provisions for security receipts as per a regulatory mandate.
The Thrissur-headquartered lender had reported a loss of ₹50.31 crore in the year-ago period, while its profit for the preceding September quarter had stood at ₹223 crore.
Its chief executive and managing director Murali Ramakrishnan said the bank decided to take a provision of ₹312 crore for the quarter because of a December 4, 2022 RBI circular asking lenders to do ageing provisions for security receipts (SRs) dating before 2017.
He said since 2004, the bank had sold non-performing assets of ₹1,955 crore to asset reconstruction companies, of which the balance volume after redemptions had stood at ₹1,455 crore for which the provision had to be done.
The bank will have to set aside another ₹48 crore in the fourth quarter towards such provisions and ₹15 crore in entire FY24 if the stock of the SRs remains the same, he said, hoping for a provision write-back of ₹100 crore in FY24 to aid the profits.
The bank's core net interest income jumped 44 per cent to ₹825 crore during the reporting quarter, while the non-interest income was negative ₹34.18 crore because of the additional money set aside as provisions for ageing security receipts.
The credit growth came at over 18 per cent, but the deposit growth lagged at 3 per cent. Ramakrishnan exuded confidence that the bank will be able to garner sufficient liabilities to fuel credit growth, saying deposits have an elasticity where a hike in rates can help bridge any shortfall.
The net interest margins (NIM) widened to 3.52 per cent for the quarter, and Ramakrishnan said the bank will be able to close FY23 with a NIM of 3.20 per cent.
Its overall capital adequacy was over 16 per cent and the lender does not have any immediate plans of going for an infusion, he said.
The South Indian Bank scrip tanked 8.54 per cent to close at ₹16.60 a piece on the BSE, as against gains of 0.06 per cent on the benchmark in Tuesday's trade.