SOUTH IND.BANK 2022-23 Annual Report Analysis

Sun, 6 Aug

SOUTH IND.BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

SOUTH IND.BANK Income Statement Analysis

• Interest income during the year rose 9.8% on a year-on-year (YoY) basis.
• Interest expenses were down by 2.9% YoY during the same period.
• Operating expenses increased by 14.3% YoY during the year.
• The bank's net interest income (NII) increased by 34.5% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.2% in FY23 as against 2.8% in FY22.
• Other income declined by 21.5% YoY during the year.
• Net profit for the year increased by 1630.3% YoY.
• Net profit margins during the year increased to 10.7% in FY23 from 0.7% in FY22.

SOUTH IND.BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	65,865	72,332	9.8%
Other Income	Rs m	10,339	8,114	-21.5%
Interest Expense	Rs m	43,468	42,211	-2.9%
Net Interest Income	Rs m	22,398	30,121	34.5%
Operating Expense	Rs m	20,263	23,158	14.3%
Pre-provision Operating Profit	Rs m	12,473	15,076	20.9%
Provisions & Contingencies	Rs m	12,025	7,323	-39.1%
Profit before tax	Rs m	-922	12,468	1451.9%
Tax	Rs m	-1,370	4,715	444.0%
Profit after tax	Rs m	448	7,753	1630.3%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	2.8	3.2
Net profit margin	%	0.7	10.7

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SOUTH IND.BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 916.5 bn as compared to Rs 891.4 bn in FY22, thereby witnessing an increase of 2.8%.
• Advances for the year stood at Rs 698.0 bn as compared to Rs 599.9 bn during FY22, a rise of 16.4%.
• Cost of deposits for SOUTH IND.BANK fell 7.7% and stood at 4.2%, while yield on advances fell to 8.2%.
• The lender's investments rose to Rs 246.4 bn during the year from Rs 214.4 bn in FY22.
• Borrowing stood at Rs 69.9 bn, a growth of 112.3% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 1,077.0 bn as against Rs 1,000.5 bn during FY22, thereby witnessing a rise of 7.6%.

SOUTH IND.BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	58,530	66,746	14.0%
Advances	Rs m	599,934	698,044	16.4%
Deposits	Rs m	891,417	916,501	2.8%
Yield on advances	%	8.4	8.2
Cost of Deposits	%	4.6	4.2
Investments	Rs m	214,445	246,413	14.9%
Borrowings	Rs m	32,945	69,939	112.3%
Total Assets	Rs m	1,000,519	1,076,972	7.6%

Current Valuations for SOUTH IND.BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 3.7, an improvement from the EPS of Rs 0.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 19.6, stands at 3.9 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.6 times, while the price to income ratio stands at 0.4 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	31.5	34.6
Earnings per share (Unadj.)	Rs	0.2	3.7
Diluted earnings per share	Rs	0.2	3.7
Avg P/E ratio	Rs	50.0	3.9
Avg P/ABV ratio	Rs	0.3	0.6
Avg Market Cap	Rs	22,392	30,418
Dividends per share (Unadj.)	Rs	0.00	0.30

Ratio Analysis for SOUTH IND.BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 76.2x during FY23, from 67.3x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 14.78x during FY23, from 15.79x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): SOUTH IND.BANK's capital adequacy ratio (CAR) was at 17.3% as on 31 March 2023 as compared to 15.9% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 11.6% during FY23, from 0.8% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.72% during FY23, from 0.04% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 14.15% during FY23, from 2.10% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. SOUTH IND.BANK's gross NPA ratio stood at 5.1% as of 31 March 2023 compared to 5.9% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of SOUTH IND.BANK was 1.9% in financial year 2023. This compared with 3.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	67.3	76.2
Debt to Equity Ratio	x	15.8	14.8
Loans / Deposits	x	0.0	0.1
Capital Adequacy Ratio	%	15.9	17.3
Return on Equity	%	0.8	11.6
Return on Assets	%	0.0	0.7
Return on Capital Employed	%	2.1	14.2
% of Gross NPAs	%	5.9	5.1
% of Net NPAs	%	3.0	1.9
Yield on Advances	x	8.4	8.2
Yield on Investments	x	5.2	3.7

To see how SOUTH IND.BANK has performed over the last 5 years, please visit here.

SOUTH IND.BANK Share Price Performance

Over the last one year, SOUTH IND.BANK share price has moved up from Rs 8.1 to Rs 19.6, registering a gain of Rs 11.5 or around 141.8%.

Meanwhile, the S&P BSE BANKEX is trading at 50,428.6 (up 0.7%). Over the last one year it has moved up from 43,550.8 to 50,428.6, registering a gain of 6,877.7 points (up 15.8%).

Overall, the S&P BSE SENSEX is up 12.6% over the year.

(To know more, you can check out historical annual results for SOUTH IND.BANK here and quarterly results for SOUTH IND.BANK here)