Shares of South Indian Bank soared 11% to trade at a 7-week high after the bank posted a robust performance for Q4FY23. The private sector lender on Thursday reported a 22.74% YoY and 224% QoQ growth in net profit to ₹334 crore in the fourth quarter ended on March 31, 2023, on better interest income.
Net interest income (NII), which is the difference between the interest earned from lending activities and the interest paid to depositors, came in at ₹857 crore, an increase of 34% YoY. The bank's net interest margin improved to 3.67% in Q4 from 3.52% in the preceding December quarter.
Its other income showed a considerable increase of 69.11% YoY to ₹345 crore. In the previous quarter (Q3 FY23), the bank had reported a loss of ₹34 crore in other income.
The bank's operating profit rose to ₹561.55 crore from ₹287.95 crore in the corresponding quarter of the last fiscal year.
Meanwhile, the bank's focus on quality asset book as well as collection efficiency brought down the provisions from ₹41 crore in Q3 FY23 to ₹39 crore in Q4 FY23, the bank said in an exchange filing.
On the asset quality side, the bank's gross non-performing assets (NPA) came down by 76 basis points from 5.90% to 5.14% on a year-on-year basis. Similarly, net NPA dropped by 111 basis points from 2.97% to 1.86%.
The bank declared a net profit of ₹775.09 crore for FY22–23, the highest ever in the history of the bank. The growth in net profit is 1623.11% compared to the net profit of ₹45 crore in previous year. While the bank also recorded the highest-ever net interest income of ₹3,012.08 crore in FY23. The net interest margin for FY22–23 stood at 3.30%, the highest in 17 years.
Following the development, the stock opened strongly at Rs17.65 apiece, 8.30% higher than the previous close of Rs16.30, and it continued to surge in the early trade to reach an intraday high of ₹18.20, up by 11.65%, reaching a 7 week high.
The stock has seen a one-way rally in CY22, returning 112%, rising from ₹8.90 apiece to ₹18.80. Prior to this, the stock had faced four consecutive years of negative returns, starting from 2018.
The stock witnessed a weak start in the year 2023, experiencing a decline in the first quarter. However, it showed improvement in April, delivering a return of 12.30%. Additionally, in May, the stock has continued its momentum with an almost 9.75% rally so far.
06 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
