South Indian Bank

VG Mathew MD& CEO of the bank addressed the call:Highlights by Capital Mkt
Bank has improved business growth to 13% in Q2FY2016 from 12% in the previous quarter. Bank has maintained the advances growth steady at 12% at end September 2015, despite decline in the gold loan book.The decline in Loan-to-Value (LTV) ratio and price volatility has led to the drop in gold loan book. As per the bank, the prospects for growing gold loan book has improved with the reduced price volatility.
Bank is strongly focusing on retail and SME loans segment, while proposes to further deepen relationships with retail and SME customers. Bank intends to emerge as a bank of choice in the SME segment. The bank is planning to set up more housing loan hubs to boost home loans growth.Bank has recorded loan growth of 13% in the first half of FY2016, while expects loan growth to be higher in the second half of FY2016. Bank has targeted loan growth of 30% for auto and housing segments, 20% for agriculture and SME segments and 12% for small corporate loans (Rs 25-50 crore).
Fresh slippages of advances jumped to Rs 222 crore in Q2FY2016, mainly contributed by one pharma sector account of Rs 119 crore from restructured advance book. Another small corporate account contributed slippages of Rs 37 crore, while rest of the slippages came from smaller accounts in Q2FY2016.Bank has restructured one account from road sector with the exposure of Rs 95 crore in Q2FY2016, mainly on account of change in date of commencement of commercial operation.
Outstanding restructured advance book of the bank stood at Rs 2000 crore at end September 2015. As per the bank, about 44% of the restructured advance relates to power sector, and expects these account to show turnaround with the recent measures announced by the government.Regarding the non-power sector restructured advances, bank sees no major concerns, which includes about 11 accounts with the exposure of Rs 50 crore and above each.Bank always intends to maintain GNPA ratio below 2%. However, the GNPA ratio increased above 2% mark in Q2FY2016 due to slippages of one large pharma account. Bank expects to bring GNPA ratio below 2% by end March 2016.Bank has improved the NIM to 2.81% in Q2FY2016 supported by rationalization of liabilities. Meanwhile, bank is working on further rationalization of liabilities and expects to sustain NIM at current level.Bank witnessed surge in employee expenses in Q2FY2016 mainly on account of one-off leave encashment provisions of Rs 5 crore and another Rs 5 crore of provisions related to employee wage revision. Bank expects to improve cost-to-income ratio to 56% by end March 2016 and proposes to further improve cost-to-income ratio to 50% in the medium term.Bank recorded large write-back of Rs 37.9 crore of restructured advances provision in Q2FY2016 on account of change in working of sacrifice provision for restructured advance as well as slippages of large restructured advance account to NPA category in Q2FY2016.
Regarding the emerging competition from the newly licensed banks, bank has been strongly working on improvising its net and mobile banking platform.