The South Indian Bank (SOUTHBANK) Q2 24/25 earnings summary

Executive summary

• Net profit for Q2 FY25 reached ₹32,479 lakhs (₹325 Cr), up 18% year-over-year, with total income up 12.9% and operating profit up 20% from Q2 FY24.

• Gross advances grew 13% YoY to ₹84,714 Cr, and deposits increased 9% to ₹1,05,451 Cr, reflecting strong business momentum.

• Maintained a diversified loan book with a focus on retail, MSME, and high-quality corporate segments, and continued expansion outside Kerala.

• The results were reviewed and approved by the Board and subjected to a limited review by joint statutory auditors, with an unmodified report.

• Focus remains on shifting asset mix from corporate to higher-yielding retail and MSME segments.

Financial highlights

• Net interest income for the quarter was ₹882 Cr, up 6% year-over-year; non-interest income surged 26% to ₹449 Cr, driven by treasury gains and reclassification of penal interest.

• Net interest margin stood at 3.24%, and cost-to-income ratio improved to 58.7% in Q2FY25.

• Return on assets was 1.07%, and return on equity was 13.71% for the quarter.

• Provision coverage ratio (excluding write-off) improved to 71.24%; including write-off, it reached 80.72%.

• Gross NPA reduced to 4.40% (down 56 bps YoY); net NPA fell to 1.31% (down 39 bps YoY).

Outlook and guidance

• Near-term return on assets expected between 90-110 bps, targeting 140-150 bps over two years.

• Deposit growth targeted at 10% annually; asset side growth at 10-12% with a shift toward retail/MSME.

• Ongoing focus on digital transformation, operational efficiency, and cost optimization, with new automated loan origination systems and fintech partnerships underway.

• Emphasis on enhancing portfolio resilience, branch productivity, and compliance architecture.

• Corporate book to reduce to 33% of total assets over two years, with retail and MSME driving growth.