InvestorQ : Why did South Indian Bank report such a deep loss in the Q3?
Archita Jajjoo made post

Why did South Indian Bank report such a deep loss in the Q3?

Niti Shenoi answered.
1 year ago

The news is not great as South Indian Bank Q3 net dipped into a net loss of Rs.91.62 crore due to higher loan loss provisioning. Even total revenues fell 4.83% at Rs.2082 crore. The bank reported growth in treasury income and interest on retail loans. On the other hand, SIB saw a sharp fall in corporate banking revenues by 30%.

Operating profits for the Dec-20 quarter were down 1.48% at Rs.377 crore due to a sharp spike in the employee expenses of the bank. Despite the small fall, OPM still expanded marginally from 17.51% in Dec-19 quarter to a level of 18.13% in the Dec-20 quarter. However, due to doubling of loan loss provisions from Rs.261 crore in Dec-19 quarter to Rs.499 crore, SBI reported a net loss of Rs.92 crore and negative net margins.

There are some concerns on the bank performance and current solvency status. Gross and net NPAs are higher than acceptable standards and the doubling of loan loss provisions in the current quarter underlines the stress. Even the ROA has generally been at around 0.30%, which is well below the median private banking ROA. The capital adequacy at 13% leaves limited room for asset book expansion.