South Indian Bank Ltd. share price target

SIB's loan book showed a sound growth of 13% YoY in 1QFY20 (down 0.1% QoQ). The growth was led by Retail (25% YoY, 3% QoQ) and Agriculture (14% YoY, 4% QoQ) segments. The share of retail segment as a proportion of total loan book is 30%, upward by 300 bps YoY driven by LAP (average ticket size of 38 lakhs) and gold loan portfolios. Management reiterated that their focus will continue to be on Retail, MSME and Agri...

which helped stable asset quality but marginally lift PCR to 32.3% (45.1% incl. Bank's operating metrics like NIMs & CASA profile remained stable (PLe: Rs890mn) as operating performance is improving only gradually. technical w.off). Bank is closely monitoring some of the dispensation related...

21 January 2019 Higher provisions dragged South Indian Banks (SIB) 3QFY19 PAT to INR838m (27% YoY decline) even as operating profit growth stood flat. Fresh slippages increased to INR6.59b led by downgrade of IL&FS; exposure (INR4b) and one EPC account (INR1.03b). But, slippages in retail and agri portfolio improved. Advances growth improved 15% YoY / 5% QoQ while margins improved 5bp QoQ to 2.66%. However, NII growth stood modest at 2% YoY / 2.6% QoQ. C/I ratio improved marginally to 53% mainly supported by other income (18% YoY growth). SIB is yet to provide for INR153m of unamortized MTM provision in the next quarter. Loan growth at 15% YoY was led by 29% YoY growth in pure retail loans while the corporate loan segment grew 14% YoY. The growth in agriculture/SME book stood relatively modest at 7%/6% YoY. Corporate book now comprises ~35% of the total advances.

Declining market share in its home state of Kerala has been a wake-up call for SIB. To recoup the recent loss in market share, SIB now aims to leverage its existing customer relationship by cross selling. The bank has constituted a separate 'business development channel' in addition to its existing branch network to speed up the sourcing of retail products.

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.