South Indian Bank

Jul 31, 2022

SCRIP CODE: SOUTHBANK Sub: Conference call for Investors/Analysts -Transcript of the Conference Call Pursuant to Regulation 30,46 and all other applicable provisions of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 and in continuation of our letters SEC/ST EX.STT/ 58 /2022-23 dated July 25,2022 and SEC/ST EX.SIT/ 62 /2022- 23 dated July 27, 2022 we wish to inform you that, the transcript ofthe conference call for Investors and Analysts held on Wednesday, 27th July, 2022 at 12:30 P.M. (1ST) is attached and made available on the Bank's website at v.,rww.southindianbank.com under Investors Desk ➔ Quarterly Earnings Call. Kindly take the same in your records. Yours faithfully, The South Indian Bank Ltd., Regd. Office: Thrissur, Kerala Head Office: S.1.B. House, T.B. Road, P.B. No: 28, Thrissur - 680 001, Kerala. (Tel) 0487-2420 020, (Fax) 91487-244 2021. e-mail: sibcorporate@sib.co.in, CIN: L65191KL1929PLC001017, Toll Free (India) 1800-102-9408,1800-425-1809 (BSNL) www.southindianbank.com Q1 FY2023 Earnings Conference Call" July 27, 2022 ANALYST: MR. PRABAL GANDHI - ANTIQUE STOCK BROKING LIMITED MANAGEMENT: MR. MURALI RAMAKRISHNAN - MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER - SOUTH INDIAN BANK MR. THOMAS JOSEPH - EVP AND GROUP BUSINESS HEAD, SALES - SOUTH INDIAN BANK MR. SANCHAY SINHA - HEAD - RETAIL LIABILITIES - SOUTH INDIAN BANK MS. MINU MOONJELY - GM (CREDIT) - SOUTH INDIAN BANK MR. SENTHIL KUMAR - GM RECOVERY - SOUTH INDIAN BANK MR. RITESH TULSIDAS BHUSARI - TREASURY - SOUTH INDIAN BANK Page 1 of 17 July 27, 2022 Moderator:Ladies and gentlemen, good day and welcome to South Indian Bank Limited Q1 FY2023 earnings conference call, hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prabal Gandhi from Antique Stock Broking Limited. Thank you, and over to you, Sir! Prabal Gandhi:Thanks. I welcome everyone. On behalf of South Indian Bank management, we have Mr. Murali Ramakrishnan - Managing Director and Chief Executive Officer; Ms. Chithra - Chief Financial Officer and other senior management on the call. Without further ado, I will hand over the call to Murali Sir for his opening remarks post which we can open the floor for Q&A. Thank you and over to you Sir! Murali Ramakrishnan: Good morning to all of you and thank you for joining us for the South Indian Bank Q1 FY2023 earnings conference call. We are joined by my colleagues, Mr. Thomas Joseph - EVP and Group Business Head Sales; Mr. Anto George C - Head HR and Admin; Mr. Sanchay Sinha - Head Retail Liabilities; Ms. Chithra H - CFO; Ms. Minu Moonjely - GM Credit; Mr. Senthil Kumar - GM Recovery and Mr. Ritesh - Treasury. Let me start with key highlights of financial performance for the quarter ended June 2022-2023. Bank had declared quarterly results with a net profit of 115.35 Crores as against Rs. 10.31 Crores during the corresponding period of the previous year. CASA grew by 17.92% year-on-year from Rs. 25,725 Crores to Rs. 30,335 Crores as of June 2022. Provision coverage ratio increased to 70.11% which was 60.11% last year. Overall, GNPA improved to 5.87% from 8.02% as on June 2021. Net NPA improved to 2.87% for this quarter from 5.05% as on June 2021. Following the robust collection drive, our SMA2 portfolio has come down by 48% on a year-on-year basis. We have built a new book of 27,787 Crores with better under writing which is reflected in the GNPA close to 0.02% for the new book and SMA2 book of 0.24%. Let me now take you through the other operational and financial performance of the bank. The total business for the bank increased by 7% and stands at Rs.1,50,900 Crores as at June 30, 2022. Advances grew by 10.95% year-on-year to Rs.64,704 Crores bagged by total disbursement of Rs.12,548 Crores during quarter ended June 2022. The details of disbursements are as follows: Corporate Rs. 7,595 Crores predominantly to A and above corporates; Gold Rs. 2,978 Crores; business segment Rs. 939 Crores; other retail Rs. 1036 Crores. The share of A and above rated large corporates has improved from 56% as at June 30, 2021, to 88% as at June 30, 2022. We have new slippages to NPA in our new corporate book. Gold is a segment which has been Page 2 of 17 July 27, 2022 consistently growing for us, disbursement year-on-year was Rs. 9,653 Crores with an average LTV of 77.8% and a ticket size of about 1.32 lakh. Gold loan book grew by 28% year-on-year to reach 11,961 Crores. Personal loan is another segment where we are seeing good traction since the launch of pre-approved PL in September 2021, as on date our PL book had crossed 1100 Crores mark. Credit card is another growth area which we launched during FY2022, by June 2022, we have issued more than one lakh credit cards with monthly average spends of Rs. 21,344, the total book as of June 2022 for credit cards stood at Rs. 330 Crores. As far as SME is concerned, we are seeing good uptick and disbursement month-on-month over past few quarters, we are cautiously growing the segment with market disbursement of more than 300 Crores as against the average of 175 Crores for Q1 FY2022. We expect the economy to pick from the current situation. A healthy economic growth and government spending towards infrastructures sectors will help credit uptake in coming years. Our aim is to grow loan book by double digit in FY2023. Coming to liabilities, our core deposit grew by 8.8% year-on-year to 86,460 Crores, CASA deposits increased by 18% year-on-year to Rs. 30,335 Crores predominantly due to continued improvement in SA business which grew by 18% year-on-year to Rs. 25,457 Crores. CASA ratio continued to improve and increase by 399 bps year-on-year to reach 34.39% of the total deposits as at June 30, 2022. Bulk deposits declined by 63% year-on-year to Rs. 1736 Crores in line with our strategy. NRI deposits continue to grow and is at Rs. 27,598 Crores, it contributes at 31% of our total deposits. Low-cost NRI deposits grew by 10% year-on-year Rs. 9086 Crores. The bank saw robust growth of 22% year-on-year in our NRI remittance business during the quarter. Our investment book was at Rs. 23,489 Crores split into HTM of 19,122 Crores and AFS and HFT Rs. 4367 Crores. Last year Q1, the M duration of the investment book was at 3.13 which is cautiously reduced at 2.57 as of June 2022. The bank booked income upfront during last year Q1 and as of now that opportunity does not exist. The fresh slippages were reduced by 48% on year- on-year from Rs. 879 Crores during Q1 2022 to Rs. 435 Crores during Q1 2023 which was within the overall guidance, the overall restructured book stands at 2,198 Crores of which business segment is 1319 Crores, personnel segment is 308 Crores and corporate is 571 Crores. The bank holds standard and restructured provisions of Rs. 590 Crores. Gross NPA ratio improved by 215 bps from 8.02% as at June 30, 2021, to 5.87% as at June 30, 2022. During the quarter, the bank recovered or upgraded Rs. 235 Crores worth of NPAs, the net NPA ratio improved by 218 BPS from 5.05% as at June 30, 2021, to 2.87% as at June 30, 2022. Our endeavor is to bring GNPA below 5% and net NPA closer to 2% in FY2023. The bank reported a net profit of Rs. 115 Crores in Q1 2023 mainly due to improvement in net interest income and reduction in provisions on account of lower slippages and better recoveries. Net interest income for the quarter increased by 11% year-on-year to Rs. 603 Crores. Net interest Page 3 of 17