SOUTH IND.BANK 2023-24 Annual Report Analysis

Tue, 6 Aug

SOUTH IND.BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

SOUTH IND.BANK Income Statement Analysis

• Interest income during the year rose 19.1% on a year-on-year (YoY) basis.
• Interest expenses were up by 25.1% YoY during the same period.
• Operating expenses increased by 28.6% YoY during the year.
• The bank's net interest income (NII) increased by 10.6% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.3% in FY24 as against 3.2% in FY23.
• Other income increased by 86.7% YoY during the year.
• Net profit for the year increased by 38.0% YoY.
• Net profit margins during the year increased to 12.4% in FY24 from 10.7% in FY23.

SOUTH IND.BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	72,332	86,128	19.1%
Other Income	Rs m	8,114	15,145	86.7%
Interest Expense	Rs m	42,211	52,808	25.1%
Net Interest Income	Rs m	30,121	33,321	10.6%
Operating Expense	Rs m	23,158	29,788	28.6%
Pre-provision Operating Profit	Rs m	15,076	18,678	23.9%
Provisions & Contingencies	Rs m	7,323	7,976	8.9%
Profit before tax	Rs m	12,468	15,289	22.6%
Tax	Rs m	4,715	4,587	-2.7%
Profit after tax	Rs m	7,753	10,702	38.0%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.2	3.3
Net profit margin	%	10.7	12.4

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SOUTH IND.BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 1,019.2 bn as compared to Rs 916.5 bn in FY23, thereby witnessing an increase of 11.2%.
• Advances for the year stood at Rs 780.6 bn as compared to Rs 698.0 bn during FY23, a rise of 11.8%.
• Cost of deposits for SOUTH IND.BANK rose 14.7% and stood at 4.8%, while yield on advances rose to 8.8%.
• The lender's investments fell to Rs 239.8 bn during the year from Rs 246.4 bn in FY23.
• Borrowing stood at Rs 39.1 bn, a fall of 44.1% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 1,174.1 bn as against Rs 1,077.0 bn during FY23, thereby witnessing a rise of 9.0%.

SOUTH IND.BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	66,746	88,237	32.2%
Advances	Rs m	698,044	780,606	11.8%
Deposits	Rs m	916,501	1,019,191	11.2%
Yield on advances	%	8.2	8.8
Cost of Deposits	%	4.2	4.8
Investments	Rs m	246,413	239,765	-2.7%
Borrowings	Rs m	69,939	39,121	-44.1%
Total Assets	Rs m	1,076,972	1,174,125	9.0%

Current Valuations for SOUTH IND.BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 4.1, an improvement from the EPS of Rs 3.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 25.4, stands at 6.7 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 0.8 times, while the price to income ratio stands at 0.8 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	34.6	32.9
Earnings per share (Unadj.)	Rs	3.7	4.1
Diluted earnings per share	Rs	3.0	4.1
Avg P/E ratio	Rs	3.9	6.7
Avg P/ABV ratio	Rs	0.8	0.8
Avg Market Cap	Rs	30,418	71,755
Dividends per share (Unadj.)	Rs	0.30	0.30

Ratio Analysis for SOUTH IND.BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 76.6x during FY24, from 76.2x during FY23. 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 11.99x during FY24, from 14.78x during FY23. 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 19.9% as on 31 March 2024 as compared to 17.3% 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 12.1% during FY24, from 11.6% during FY23. 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 0.91% during FY24, from 0.72% during FY23. 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 14.36% during FY24, from 14.15% during FY23. 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 4.5% as of 31 March 2024 compared to 5.1% 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 1.5% in financial year 2024. This compared with 1.9% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	76.2	76.6
Debt to Equity Ratio	x	14.8	12.0
Loans / Deposits	x	0.1	0.0
Capital Adequacy Ratio	%	17.3	19.9
Return on Equity	%	11.6	12.1
Return on Assets	%	0.7	0.9
Return on Capital Employed	%	14.2	14.4
% of Gross NPAs	%	5.1	4.5
% of Net NPAs	%	1.9	1.5
Yield on Advances	x	8.2	8.8
Yield on Investments	x	3.7	7.8

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 19.6 to Rs 25.4, registering a gain of Rs 5.8 or around 29.3%.

Meanwhile, the S&P BSE BANKEX is trading at 57,321.4 (up 0.7%). Over the last one year it has moved up from 50,428.6 to 57,321.4, registering a gain of 6,892.8 points (up 13.7%).

Overall, the S&P BSE SENSEX is up 21.2% 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)