South Indian Bank - Stock TechnoFunda Ideas

South Indian Bank (18 to 25.35)

#SOUTHBANK
Recommended on: 28-Dec-2022
Recommended Price: 18
Today’s High: 25.35
Return Till Date: 40.83%
Date: 24-Aug-2023

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South Indian Bank: A Transformation Story with Strong Business Performance

As one of the oldest banks in South India, The South Indian Bank (SIB) has a rich history dating back to the Swadeshi movement. Incorporated on 29 January 1929 as a private limited company and later converted into a public limited company, SIB was established with the aim of providing a safe and efficient platform for the savings and credit needs of the community. Today, SIB offers a range of retail and corporate banking services, Para banking activities, and treasury and foreign exchange business.

Business Overview

Distribution Network:
SIB boasts a robust distribution network that includes 877 branches and 1443 ATMs across the country, with a strong presence in south India.

Loan Book:
With a loan book totaling | 72092 crore, SIB demonstrates a well-diversified asset mix. The loan book is composed of corporate, retail, business, and agriculture segments, contributing roughly 33%, 22%, 25%, and 20% respectively.

Transformation and Key Financial Metrics

Business Transformation:
SIB is currently undergoing a transformation stage, which has resulted in a gradual improvement in its business performance over the past years.

Key Financial Metrics:
Advances: Expect credit growth in-line with industry at 12-13% in FY24-25E.

CASA Ratio: Steady liabilities mix and repricing of around 65% of deposits are expected to drive a ~10-20 bps improvement in margins.

Asset Quality: Anticipate a gradual improvement in efficiency and moderation in net slippages, resulting in a RoA of ~0.8% in FY24-25E on a conservative basis.

Expanded Network and Recognitions

Expanded Network:
SIB has successfully expanded its presence across India, with 935 banking outlets, including branches, extension counters, satellite branches, and ultra small branches, as well as 1,424 ATMs/CRMs. During the financial year 2019-20, the bank opened 7 new outlets and 37 ATMs/CRMs.

Recognitions:
During FY2020, SIB received prestigious awards, such as the Best MSME Bank (Private Sector) Award by ASSOCHAM and the Corporate Social Responsibility (CSR) Excellence Award, 2019 by Rotary District 3201. The bank also earned 6 awards at the IBA Banking Technology Awards, 2020.

Strong Disbursement Growth Led by Corporate Segment

SIB has showcased a significant improvement in its key business parameters and highlights a turnaround in line with its management strategy. Notably, the bank achieved its best year of operational performance, registering a record-high profit. The loan book reached its highest-ever value of Rs. 72,092cr, with a growth of 16%, driven by the corporate segment. The bank also witnessed improvement in the quality of its corporate clients. The share of A and above-rated large corporates increased from 89% in FY22 to 96% in FY23.

With a strong business performance and ongoing transformation efforts, South Indian Bank has positioned itself for sustainable growth. The bank’s focus on high-yielding products and prudent asset quality is expected to drive profitability and further enhance its market position. With an extensive network and recognized achievements, SIB continues to establish itself as a leading player in the Indian banking industry.