TAMILNAD MERCANTILE BANK 2023-24 Annual Report Analysis

Wed, 11 Sep

TAMILNAD MERCANTILE 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.

TAMILNAD MERCANTILE BANK Income Statement Analysis

• Interest income during the year rose 18.8% on a year-on-year (YoY) basis.
• Interest expenses were up by 35.7% YoY during the same period.
• Operating expenses increased by 14.2% YoY during the year.
• The bank's net interest income (NII) increased by 2.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 3.9% in FY24 as against 4.1% in FY23.
• Other income increased by 2.5% YoY during the year.
• Net profit for the year increased by 4.2% YoY.
• Net profit margins during the year declined to 22.1% in FY24 from 25.2% in FY23.

TAMILNAD MERCANTILE BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	40,810	48,479	18.8%
Other Income	Rs m	6,291	6,449	2.5%
Interest Expense	Rs m	19,869	26,970	35.7%
Net Interest Income	Rs m	20,941	21,509	2.7%
Operating Expense	Rs m	11,504	13,141	14.2%
Pre-provision Operating Profit	Rs m	15,728	14,818	-5.8%
Provisions & Contingencies	Rs m	5,436	4,097	-24.6%
Profit before tax	Rs m	13,936	13,936	0.0%
Tax	Rs m	3,644	3,216	-11.8%
Profit after tax	Rs m	10,293	10,720	4.2%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	4.1	3.9
Net profit margin	%	25.2	22.1

Don't Miss: Key Information for Long-term Investors

TAMILNAD MERCANTILE BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 495.2 bn as compared to Rs 477.7 bn in FY23, thereby witnessing an increase of 3.7%.
• Advances for the year stood at Rs 397.3 bn as compared to Rs 372.9 bn during FY23, a rise of 6.6%.
• Cost of deposits for TAMILNAD MERCANTILE BANK rose 30.1% and stood at 5.4%, while yield on advances rose to 9.5%.
• The lender's investments rose to Rs 152.6 bn during the year from Rs 141.6 bn in FY23.
• Borrowing stood at Rs 13.0 bn, a growth of 147.8% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 615.5 bn as against Rs 579.0 bn during FY23, thereby witnessing a rise of 6.3%.

TAMILNAD MERCANTILE BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	69,283	79,212	14.3%
Advances	Rs m	372,897	397,338	6.6%
Deposits	Rs m	477,665	495,151	3.7%
Yield on advances	%	8.4	9.5
Cost of Deposits	%	4.1	5.4
Investments	Rs m	141,560	152,626	7.8%
Borrowings	Rs m	5,250	13,012	147.8%
Total Assets	Rs m	578,954	615,525	6.3%

Current Valuations for TAMILNAD MERCANTILE BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 67.7, an improvement from the EPS of Rs 65.0 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 483.4, stands at 7.4 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.0 times, while the price to income ratio stands at 1.6 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	257.7	306.2
Earnings per share (Unadj.)	Rs	65.0	67.7
Diluted earnings per share	Rs	65.0	67.7
Avg P/E ratio	Rs	7.3	7.4
Avg P/ABV ratio	Rs	1.4	1.0
Avg Market Cap	Rs	74,754	79,734
Dividends per share (Unadj.)	Rs	10.00	10.00

Ratio Analysis for TAMILNAD MERCANTILE BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 80.2x during FY24, from 78.1x 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 6.42x during FY24, from 6.97x 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): TAMILNAD MERCANTILE BANK's capital adequacy ratio (CAR) was at 29.4% as on 31 March 2024 as compared to 26.3% 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 deteriorated and stood at 13.5% during FY24, from 14.9% 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 deteriorated and stood at 1.74% during FY24, from 1.78% 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 deteriorated and stood at 17.29% during FY24, from 22.15% 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. TAMILNAD MERCANTILE BANK's gross NPA ratio stood at 1.4% as of 31 March 2024 compared to 1.4% 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 TAMILNAD MERCANTILE BANK was 0.9% in financial year 2024. This compared with 0.6% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	78.1	80.2
Debt to Equity Ratio	x	7.0	6.4
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	26.3	29.4
Return on Equity	%	14.9	13.5
Return on Assets	%	1.8	1.7
Return on Capital Employed	%	22.1	17.3
% of Gross NPAs	%	1.4	1.4
% of Net NPAs	%	0.6	0.9
Yield on Advances	x	8.4	9.5
Yield on Investments	x	6.4	6.8

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

TAMILNAD MERCANTILE BANK Share Price Performance

Over the last one year, TAMILNAD MERCANTILE BANK share price has moved down from Rs 591.0 to Rs 483.4, registering a loss of Rs 107.6 or around 18.2%.

Meanwhile, the S&P BSE BANKEX is trading at 58,167.6 (up 0.1%). Over the last one year it has moved up from 51,107.6 to 58,167.6, registering a gain of 7,060.0 points (up 13.8%).

Overall, the S&P BSE SENSEX is up 22.2% over the year.

(To know more, you can check out historical annual results for TAMILNAD MERCANTILE BANK here and quarterly results for TAMILNAD MERCANTILE BANK here)