TMB eyes 14-15% growth in advances, 12-13% in deposits this fiscal, says MD

Tamilnad Mercantile Bank posts record Rs 318 crore Q2 profit and targets 14-15% loan growth in FY26, buoyed by strong asset quality and branch expansion plans

Thoothukudi-based Tamilnad Mercantile Bank (TMB) on Tuesday said that it is expecting a 14-15 per cent growth in advances, and 12-13 per cent in deposits during the current financial year.

 

The bank posted its highest-ever quarterly net profit of ₹318 crore during the second quarter of the financial year 2025-26 (FY26), up 5 per cent from ₹303 crore during the same period last financial year. Its total business grew by 11.40 per cent during the second quarter, the highest year-on-year growth since listing, touching ₹1.02 trillion from ₹91,875 crore in September 2024.

 

“When we end the year FY26, we will have a 14-15 per cent growth in advances, around 12-13 per cent growth in deposits, and Casa should be around 12 per cent. I think that is coming due to the various initiatives happening,” said Salee S Nair, managing director and chief executive officer of TMB. 

The bank is expected to have an additional provisioning of ₹210 crore on account of the new Expected Credit Loss (ECL) framework. Based on ECL, banks will have to adopt a predictive approach to account for potential future loan losses, starting April 1, 2027.

 

“We already have an existing Covid provision of ₹250 crore. This is not part of the PCR, and the Covid stress has sharply come down. This ₹250 crore will have to be returned back into profits. What we are trying to do is use this ₹250 crore for the ECL additional provisions as and when it takes place,” he said.

 

The bank at present has 600 branches, adding around 23 branches so far this year, and plans to open another 36 branches in the second half. The bank's net interest income was seen at ₹597 crore during Q2FY26, as against ₹596 crore for Q2FY25, registering a growth rate of 0.17 per cent. Its asset quality during the quarter improved, with the gross non-performing assets (NPA) not just improving, but touching the lowest in the last 10 years at 1.01 per cent, down from 1.37 per cent during the second quarter of FY25. Its net NPA also decreased to 0.26 per cent from 0.46 per cent, improving by 20 basis points.

 

The bank’s Casa has increased to ₹15,163 crore, up from ₹13,873 crore during the same period in FY25. The advance level of the bank has increased to ₹46,930 crore with a growth rate of 10.34 per cent on year-on-year basis. Deposits also grew by 12.32 per cent on a Y-o-Y basis to ₹55,421 crore, versus ₹49,342 crore the previous year.

 

“The advantage of being a legacy bank is that our export portfolio is around 1.05 per cent of our overall credit portfolio. Within that also, the US portfolio is only around 17.53 per cent. It is the marine products that are contributing significantly, and it is witnessing squeezing of margins, but not creating any stress, and it is insignificant for the bank,” he said, talking about the US tariff situation.