Mumbai, Jul 20 (PTI) South Indian Bank on Thursday reported a 75 per cent increase in net profit to Rs 202 crore in the June quarter, helped by a healthy expansion in margins.

The Kerala-based private sector lender had posted a net profit of Rs 115 crore in the year-ago period.

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Its net interest income rose 33.87 per cent to Rs 807 crore from Rs 603 crore a year ago, on the back of a 0.60 per cent expansion in the net interest margin to 3.31 per cent and a 15 per cent growth in advances.

The other income rose 47 per cent to Rs 361 crore, aided by a massive rise in the earnings from the treasury and forex front, it said.

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Its managing director and chief executive Murali Ramakrishnan told PTI that the rate hikes by the RBI helped it register a sharp growth in the NIMs, and added that it is aiming for a 13 per cent loan growth in FY24.

The bank's asset quality showed improvement as gross non-performing assets (NPAs) declined to 5.13 per cent of gross advances at the end of the June quarter from 5.87 per cent a year ago.

Recovery and upgradation in NPA accounts increased from Rs 296 crore in Q1 FY23 to Rs 362 crore in Q1 FY24, it said.

The fresh slippages came at Rs 468 crore against Rs 433 crore in the year-ago period. Ramakrishnan said that generally, the slippages are higher in the first quarter after which it tapers down.

The bank is confident that the fresh slippages in FY24 will come under the targeted Rs 1,500 crore, he added.

The cost-to-income ratio slid down to 58 per cent, and the bank is targeting to take the number down to 55 per cent by December, he noted.

It plans to enter the commercial vehicle and construction equipment finance, and loans against shares businesses soon, Ramakrishnan said.

Its corporate book grew 48 per cent on year during the June quarter, and the CEO maintained that a bulk of the growth is to better-rated companies.

The overall capital adequacy of the lender stood at 16.49 per cent with the core buffers at 14.04 per cent.

Ramakrishnan said a sub-committee of the board will be meeting by the end of the month to take a call on whether to go for a capital raise and added that the infusion will happen in FY24 itself if the panel decides to go ahead with the proposal.

The bank already has an enabling resolution from the shareholders to raise up to Rs 2,000 crore in core capital to bolster the reserves, which will help it for loan growth, he added.

The South Indian Bank scrip closed 4.35 per cent down at Rs 21.78 apiece on the BSE on Thursday against gains of 0.71 per cent on the benchmark.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)