South Indian Bank tanks 18% on weak Q1 results

The stock tanked 18% to Rs 18.45, also its 52-week low on the BSE, after the private sector lender reported a sharp 77% year on year decline in its net profit at Rs 230 million in June quarter.

Shares of South Indian Bank have tanked 18% to Rs 18.45 per share, also their 52-week low on the BSE, after the private sector lender reported a sharp 77% year on year decline in its net profit at Rs 230 million in June quarter (Q1FY19). The bank had profit of Rs 1.01 billion in the corresponding quarter in the previous fiscal.

Net interest income of the bank during the quarter under review grew 7% at Rs 4.94 billion against Rs 4.61 billion in year ago quarter. Net interest margin (NIM) declined 20 bps (basis points) to 2.6% from 2.8%.

The bank’s assets quality also worsened during the quarter as the gross and net NPA (non-performing assets) rose by 93 bps and 73 bps at 4.54% and 3.27%, respectively.

In a press release, the bank said the reason for the decline in profit was the reduction in the Treasury trading profit by Rs 730 million and incremental MTM (mark to market) provision in the Treasury Book by Rs 410 million owing to adverse market conditions, besides incremental one-time employee cost of Rs 330 million because of increase in gratuity ceiling and wage revision.

At 10:43 am; South Indian Bank was trading 17% lower at Rs 18.70, as compared to 0.1% rise in the S&P BSE Sensex. The trading volumes on the counter surged more than four-fold with a combined 45.11 million shares changed hands on the BSE and NSE so far.