The South Indian Bank (SOUTHBANK) Q2 25/26 earnings summary

Executive summary

• Net profit for Q2 FY26 was ₹351 crores, up 8% year-over-year from ₹325 crores, reflecting consistent application of accounting policies and necessary provisions.

• Total deposits grew 10% year-over-year to ₹115,635 crores; advances rose 9% to ₹92,286 crores.

• Portfolio quality remains strong with a shift towards MSME and retail lending, supported by improved branch productivity and digital initiatives.

• Transformation since 2020 has resulted in a more granular, diversified loan book and improved asset quality.

• Standalone and consolidated financial results for the quarter and half year ended September 30, 2025, were reviewed and approved by the Board, with unmodified limited review reports from joint statutory auditors.

Financial highlights

• Net interest margin (NIM) for the quarter was 2.8%, considered the trough, with expectations of recovery.

• Return on assets stood at 1.02%; return on equity at 13.11%.

• Capital adequacy ratio was 17.70%, with Tier 1 at 16.79% as of September 30, 2025.

• Gross NPA reduced to 2.93% (down from 4.40% year-over-year); Net NPA fell to 0.56% (down from 1.31% year-over-year).

• Non-interest income surged 26% year-over-year, driven by treasury, forex, and other income.

Outlook and guidance

• NIMs expected to recover as the current rate is seen as the bottom; further RBI rate cuts could impact NIMs.

• MSME and retail loan books targeted to grow 20%+ annually; corporate book to reduce to one-third of total advances over 18 months.

• Continued focus on retail and MSME growth, digital transformation, and operational efficiency.

• Ongoing investments in digital channels and partnerships to drive non-branch distribution.

• The bank continues to focus on prudent provisioning and risk management, with ongoing monitoring of asset quality.