Thrissur-based private-sector lender South Indian Bank (SIB) is targeting a bigger share of the booming retail loan market, focusing particularly on auto and home loan segments, said Murali Ramakrishnan, managing director and chief executive officer (MD & CEO).
The bank recorded its highest-ever quarterly net interest income for Q3FY23, at Rs 825 crore, against Rs 573 crore on a year-on-year basis.
In an exclusive interaction with Moneycontrol after the quarterly results, Ramakrishnan said the bank is exploring partnerships with builders to further expand into the retail lending sector.
“Our retail book has seen good growth. We would like to meet the market demand for the auto and home loan sectors,” Ramakrishnan said.
SIB’s net profit for Q3FY23 was at Rs 103 crore, as against a net loss of Rs 50 crore during the corresponding quarter last year. The lender’s total operating income in the period rose to 13.59 percent to Rs 1,898 crore from Rs 1,671 crore last year.
Retail growth
The bank’s retail deposit for the October-December 2022 quarter stood at Rs 88,660 crore -- 5.36 percent higher than last year’s corresponding quarter figures of Rs 84,151 crore.
Ramakrishnan, while highlighting the bank’s retail lending numbers, said while the bank has seen good growth overall, it will focus more on lending in the retail sector.
“We are seeing good traction across all products in the retail sector as we keep building our capabilities to tap the wider market. Auto and home loans will be our focus sectors but we have also seen good numbers in lending against gold and would want to continue with the same,” Ramakrishnan said.
Other than these, Ramakrishnan highlighted that the bank has also seen demand in credit cards.
“We issued more than 1,80,000 credit cards in the quarter that went by and would want to explore this sector,” he said.
Race for deposits
Banks and some big non-banking financial companies (NBFCs) are competing for deposits as they are not able to manage the high credit demand due to tight liquidity. With less growth in deposits, these financial institutions are offering high interest rates on fixed deposits (FDs).
SIB, in January, hiked interest rates to 6.5 percent to 7 percent on FDs across tenures.
Speaking on the recent deposit rate hikes by banks, Ramakrishnan his bank is cautious and is constantly monitoring the situation.
“We are meeting 3-4 times in a month to decide and gauge our deposit rates and growth,” he said.
NPA numbers
The Reserve Bank of India’s (RBI) Financial Stability Report highlighted that the banks' asset quality is on a path of improvement with GNPAs at a six-year low.
RBI data also showed that the GNPA ratio of scheduled commercial banks declined to 5.9 percent in March 2022 from 7.4 percent in March 2021. Net NPA ratio stood at 1.7 percent as on March 2022-end.
However, the RBI said that if the macroeconomic environment worsens to a medium or severe stress scenario, the GNPA ratio may rise to 6.2 percent and 8.3 percent, in March 2021 and March 2022, respectively.
Highlighting his bank’s NPA and GNPA numbers, Ramakrishnan said that the bank showed some fall in numbers and the guidance would be around 2 percent and 5 percent, respectively, till the end of this fiscal year.
On slippages, Ramakrishnan said: “We had given a guidance of around Rs 1,600 crore for this fiscal. But we have already seen slippages of Rs 1,100 crore, and, by the end of the fiscal, we would have them reach Rs 1,500 crore.”
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