South Indian Bank Ltd. share price target

Sector: Banking /Mid-Cap | Earnings Update 1QFY19 Background: South Indian Bank (SIB), among the mid-sized banks in the private sector space, operates a network of about 855 branches and about 1,386 ATMs. The bank's business is largely skewed towards the Southern state with half of its branches located in Kerala. SIB has established a strong brand recall among the Keralite-NRI Diaspora. With no identifiable promoters SIB is run by a team of professionals. As of 1QFY19 the bank had deposits of ~INR 725bn and a loan book of ~INR 562bn. The bank looks to add a...

Sector: Banking /Mid-Cap | Earnings Update 4QFY18 Background: South Indian Bank (SIB), among the mid-sized banks in the private sector space, operates a network of about 854 branches and about 1,382 ATMs. The bank's business is largely skewed towards the Southern state with half of its branches located in Kerala. SIB has established a strong brand recall among the Keralite-NRI Diaspora. With no identifiable promoters SIB is run by a team of professionals. As of 4QFY18 the bank had deposits of ~INR 720bn and a loan book of ~INR 551bn. The bank looks to add a...

SIB's reported PAT was flattish QoQ (-1%), but grew 51% YoY off a relatively low base. PPoP declined 6% QoQ, led by a 6% QoQ increase in opex with sequentially flat total income. Provisions of INR1.49b (1.1% annualized credit cost) came in below our estimate, leading to an 815bp QoQ decline in PCR to 41.2%. The bank utilized RBI's dispensation to spread MTM losses and provided INR129.6m, leaving INR344m to be provided over the next three quarters. NII declined 3% QoQ (+12% YoY), even as advances rose 5.7% QoQ (+17.6% YoY), as the NIM contracted 15bp QoQ to 2.73% due to a 14bp sequential decline in reported spreads. Opex grew 6% QoQ (+22% YoY; the bank utilized RBI's dispensation to spread out gratuity provisions, leaving INR204.5m to be further provided). CI ratio increased to 53.7% from 50.6% in 3QFY18.

South Indian Bank (SIB) Q3FY18 result was in line with our expectations with strong performance on business as well as financial fronts. While the growth in NII and PAT improved significantly, advances of the bank rose by ~17% on the back of bank's renewed focus on retail and SME sectors. Quality of earning improved with GNPA reducing by 17 bps to 3.4% in Q3FY18 (3.6% in Q2FY18) and stressed assets watch list...

SIB's reported PAT increased 3% YoY to INR1.15b, beating our estimate by 11%,as provisions of INR1.5b were 25% below our estimate. PPoP declined28%/12% QoQ/YoY, led by a sharp fall in other income (treasury gains declined91% YoY due to an increase in bond yields, while the base quarter had low yields due to the impact of demonetization). NII grew 1%/22% QoQ/YoY, driven by 5%/17% QoQ/YoY advances growth and22bp YoY NIM expansion. However, on a sequential basis, NIM contracted 7bpto 2.88% with a fall in MSME yields,as the bank is increasingly looking at greater collateral cover. Opex growth was controlled at 5%/13% QoQ/YoY(employee expenses were up 6% YoY). CI ratio increased to 50.6% (v/s 41.3% in2QFY18). Loan growth of 5%/17% QoQ/YoY was driven by robust growth in retail (+25%YoY) and SME (+25% YoY), while the corporate book grew 3% YoY, in line with the bank's retail-focused strategy. Share of corporate book has reduced to35.5% of advances compared to 40% in the year-ago period.

Sector: Banking /Mid-Cap | Earnings Update 3QFY18 Background: South Indian Bank (SIB), among the mid-sized banks in the private sector space, operates a network of about 851 branches and about 1,370 ATMs. The bank's business is largely skewed towards the Southern state with half of its branches located in Kerala. SIB has established a strong brand recall among the Keralite-NRI Diaspora. With no identifiable promoters SIB is run by a team of professionals. As of 3QFY18 the bank had deposits of ~INR 681bn and a loan book of ~INR 524bn. The bank looks to add a...

South Indian Bank (SIB) reported strong operating performance with NII growing by 13.0% YoY in line with our estimates. Improvement in NIM and C/I ratio led to 55% growth in PPOP during the quarter. However, elevated provisioning offset margin improvement and weighted on the profitability. We retain Buy' rating on...

NII grew to Rs. 503.22 Cr in Q2FY18 compared to Rs. 460.71 Cr in Q1FY18. NII grew to Rs. 503.22 Cr in Q2FY18 compared to Rs. 460.71 Cr in Q1FY18.