Mumbai, May 6 (PTI) South Indian Bank on Wednesday reported an 18.9 per cent rise in its net profit to Rs 407.40 crore for the three months to March due to lower provisioning and an uptick in net interest income.
The lender had delivered a net profit of Rs 342.41 crore in Q4 FY25.
On a standalone basis, the net profit of the bank increased by 19.1 per cent year-on-year to Rs 407.50 crore.
"Profitability was driven by a combination of portfolio diversification towards retail and MSME, which improved spreads and lifted net interest income by about 4 per cent sequentially," PR Seshadri, Managing Director and Chief Executive Officer of South Indian Bank, told PTI in an interaction.
Besides, tight cost control, strong asset quality with low slippages, and robust recoveries led to 19 per cent growth in profit, he said.
The core net interest income of the bank increased 5 per cent year-on-year to Rs 915 crore in the reporting quarter from Rs 868 crore a year ago.
Its net interest margins (NIM) improved sequentially to 2.95 per cent in Q4 FY26, from 2.86 per cent in Q3 FY26. However, on an annual basis, it declined from 3.21 per cent.
Seshadri said that the reversal in the NIMs is underway, and the bank would like to go back to 3-3.25 per cent margins over a period of time.
In the reporting quarter, the total income of the bank stood at Rs 2,945.32 crore compared to Rs 2,945.11 crore in the year-ago period.
Interest earned by the bank grew to Rs 2,559.48 crore in Q4 FY26 from Rs 2,373.44 crore in the similar quarter of the last year.
Retail deposit increased by Rs 15,366 crore, or 14.67 per cent year-on-year, to Rs 1.20 lakh crore in Q4 FY26 from Rs 1.05 lakh crore a year ago.
Savings climbed 17.24 per cent to Rs 32,475 crore in the reporting quarter from Rs 27,699 crore in the year-ago period.
NRI Deposit rose by Rs 3,769 crore to Rs 35,371 crore from Rs 31,602 crore.
Seshadri said if the situation in West Asia becomes prolonged and leads to large-scale return migration, it could pose a long-term challenge.
"For now, we remain optimistic in the near- term but cautious over the longer horizon," he added.
Gross advances increased by Rs 12,695 crore year-on-year to Rs 1,00,274 crore in Q4 FY26 from Rs 87,579 crore.
On the asset quality front, the bank's gross non-performing assets (NPAs) improved to 1.43 per cent of gross advances by the end of March 2026 compared to 3.20 per cent by the end of March 2025.
Similarly, net NPAs came down to 0.29 per cent in the reporting quarter from 0.92 per cent a year ago.
In the reporting quarter, provisions and contingencies declined by 85 per cent year-on-year to Rs 34 crore from Rs 224 crore.
Seshadri further said that remittances were strong, which is reflected in the bank's NRI balances, which have grown significantly.
"Our NRI book now accounts for about 12 per cent of total deposits. We estimate remittance growth to be in the range of 70-90 per cent year-on-year, driven by strong inward flows," he added.
The board also recommended a dividend of Rs 0.45 per equity share for FY2025-26, subject to approval of shareholders.
Shares of South Indian Bank ended 3.81 per cent up at Rs 42.51 apiece on the BSE, while broader Sensex closed 1.22 per cent higher at 77,958.52.