The South Indian Bank Limited

The South Indian Bank Limited reported a net profit of INR378 crores for Q1 FY27, marking a 17% year-on-year growth compared to INR322 crores in Q1 FY26. Total deposits grew by 11% to INR125,817 crores, with retail deposits increasing by 14% to INR124,306 crores. Gross advances expanded by 17% to INR104,368 crores, contributing to a 14% growth in total business to INR230,185 crores. The bank achieved a Return on Assets (RoA) of 105 basis points and a Return on Equity (RoE) of 12.84%.

The bank's Net Interest Margin (NIM) for the quarter stood at 3.23%, reflecting a sequential increase of 28 basis points and a year-on-year increase of 20 basis points. This improvement was primarily driven by effective liability management, including the repricing of high-rate deposits downwards by 40 to 60 basis points. Additionally, a 15% year-on-year growth in CASA balances to INR41,496 crores and a 50% reduction in bulk deposits contributed significantly to managing the cost of funding.

Asset quality showed notable improvement, with Gross Non-Performing Assets (NPA) reducing by 177 basis points year-on-year to 1.38%, and Net NPA decreasing by 42 basis points year-on-year to 0.26%. The provision coverage ratio, including write-offs, improved by 569 basis points to 94.51%. The slippage ratio for the quarter was 12 basis points (annualized 48 bps), and the credit cost was 9 basis points. Management anticipates full-year slippages to be in the range of INR500-750 crores (maximum INR800 crores) and recoveries between INR800-1,000 crores.

Fee income for the quarter was soft, experiencing a decline quarter-on-quarter and being lower year-on-year. This was attributed to a temporary shift in focus towards NIM improvement and some technical reasons related to product setup. Other income was also impacted by the absence of one-off^📎 items, such as spectacular treasury income and PSLC sales of approximately INR60 crores, which were present in the prior year's corresponding quarter. The bank expects fee income to recover as focus returns to this area and new trade and FX platforms go live by September.

The bank demonstrated strong credit growth across several segments. Business loans (MSME) grew by 13.6% year-on-year to INR14,391 crores (18% excluding a INR554 crore write-off). Gold loans saw a robust 43% year-on-year increase to INR24,930 crores, though quarter-on-quarter growth was muted due to an RBI circular on gold loans and the runoff of co-lending arrangements. Mortgage loans, home loans, and auto loans also recorded significant year-on-year growth of 34%, 19%, and 34% respectively. Corporate credit grew opportunistically, leveraging better pricing and lower risk in an uncertain market environment.

The bank maintained a strong capital position with a Capital Adequacy Ratio (CAR) of 19.62% and a Tier 1 ratio of 18.93% as of June 30, 2026. Management's strategy involves growing the balance sheet at a rate of market growth plus 2% and shifting the asset mix towards higher-yielding assets. This approach is expected to improve the Return on Assets (RoA) from the current 105 basis points to a target range of 120-125 basis points over time^⏳, while ensuring positive operating leverage.

Mr. P. R. Seshadri, the outgoing Managing Director and CEO, confirmed his departure, citing personal reasons and a desire to pursue other endeavors. He reflected positively on his 2 years and 9 months tenure, highlighting significant progress in new products, systems, processes, and organizational structure. While expressing confidence in the bank's future, he refrained from providing specific long-term guidance, acknowledging his impending exit and the responsibility of his successor.