Thrissur-based lender will accelerate personal loan And Credit It was launched last year as the southern region in which it is dominant, has a huge untapped market.
“We have put in place all the building blocks required to build a strong institution,” said Murali Ramakrishnan, CEO, South Indian Bank. “Credit cards and personal loans are NIM-building products and growth is strong. It has become more than Rs 300 crore in just one year.
NIMeither net interest marginRelating to the profitability of a bank’s core business, which refers to the difference between the income on advances and the cost of money for the lender.
South Indian Bank The company was battling bad debts after companies like DHFL and IL&FS turned their debt sour. Under the leadership of Ramakrishnan, who took over nearly two years ago, the bank increased its provisioning and implemented processes that improved underwriting.
“What is right for us is to improve the prediction,” Ramakrishnan said. “We are making sure you don’t get a shock.’
The provision coverage ratio of the bank has increased from 42.5% in March 2019 to 70% in the June quarter. Net bad debt has declined to 2.87% from 5.05% a year ago.
“The pace of development of slippage has slowed down,” he said.
In the last two years, the bank mostly underwrites credit above single A rating. The share of corporate loans below triple B rating has fallen to less than 10% in June, from a year-ago high of 32%.
The bank has set a target of increasing its assets from Rs 64,704 crore to around Rs 1 lakh crore by the next financial year. That timeline could be pushed back a year.
“I don’t want to compromise on quality for development,” Ramakrishnan said.
The Bank is increasing productivity and improving profitability metrics by expediting recovery of bad loans and increasing digitization to enhance lending as well as deposits. The bank has technical infrastructure in line with its business model which it expects to help in running the business.
The bank’s low-cost deposits, or CASA, rose 660 basis points to 34.4 per cent in the June quarter and Rs. 2,269 crores.
Ramakrishnan said, while the bank’s Tier 1 capital is substantial at 13.2 per cent, its provisioning and development could raise fresh capital, which the board would decide on need and pricing.