South Indian Bank Q4 Review - Strong Quarter; Management Succession Is A Key Monitorable: ICICI Securities

ICICI Securities Report

Led by net interest margins uptick, negative net slippages and strong other income (including lumpy TWO recovery), South Indian Bank Ltd. has reported strong Q4 FY23 with profit after tax of Rs 3.34 billion and annualised return on assets at 1.26%.

FY23 has been one of the strongest years for the bank with highest-ever business, record disbursement and highest ever tier-I. South Indian Bank, under the incumbent Managing Director and Chief Executive Officer (Mr. Murali Ramakrishnan), has churned around 58% of overall loan book since October 1, 2020.

The performance of the new book remains very impressive with miniscule gross non-performing assets /special mention account-II, a sharp rise in granularity and profitability metrices.

The incumbent MD ad CEO has been instrumental in the overall transformation of the bank. While his voluntarily exit has been a key dampener, we believe the bank would continue to benefit from the structural changes implemented so far.

In our view, the fitment and stability of the new MD and CEO would be critical to determine the pace of future progress.

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