South Indian Bank Q4 profit up 19% at ₹407 crore; provisions fall, margins steady

South Indian Bank on Wednesday reported an 18.9% rise in its net profit to ₹407.40 crore for the three months to March due to lower provisioning and an uptick in net interest income.

The lender had delivered a net profit of ₹342.41 crore in Q4 FY25.

On a standalone basis, the net profit of the bank increased by 19.1% year-on-year to ₹407.50 crore.

"Profitability was driven by a combination of portfolio diversification towards retail and MSME, which improved spreads and lifted net interest income by about 4% sequentially," PR Seshadri, managing director and chief executive officer of South Indian Bank, told PTI in an interaction.

Besides, tight cost control, strong asset quality with low slippages, and robust recoveries led to 19% growth in profit, he said.

The core net interest income of the bank increased 5% year-on-year to ₹915 crore in the reporting quarter from ₹868 crore a year ago.

Its net interest margins (NIM) improved sequentially to 2.95% in Q4 FY26, from 2.86% in Q3 FY26. However, on an annual basis, it declined from 3.21%.

Seshadri said that the reversal in the NIMs is underway, and the bank would like to go back to 3-3.25% margins over a period of time.

In the reporting quarter, the total income of the bank stood at ₹2,945.32 crore compared to ₹2,945.11 crore in the year-ago period.

Interest earned by the bank grew to ₹2,559.48 crore in Q4 FY26 from ₹2,373.44 crore in the similar quarter of the last year.

Retail deposit increased by ₹15,366 crore, or 14.67% year-on-year, to ₹1.20 lakh crore in Q4 FY26 from ₹1.05 lakh crore a year ago.

Savings climbed 17.24% to ₹32,475 crore in the reporting quarter from ₹27,699 crore in the year-ago period.

NRI deposit rose by ₹3,769 crore to ₹35,371 crore from ₹31,602 crore.

Seshadri said if the situation in West Asia becomes prolonged and leads to large-scale return migration, it could pose a long-term challenge.

"For now, we remain optimistic in the near- term but cautious over the longer horizon," he added.

Gross advances increased by ₹12,695 crore year-on-year to ₹1,00,274 crore in Q4 FY26 from ₹87,579 crore.

On the asset quality front, the bank's gross non-performing assets (NPAs) improved to 1.43% of gross advances by the end of March 2026 compared to 3.20% by the end of March 2025.

Similarly, net NPAs came down to 0.29% in the reporting quarter from 0.92% a year ago.

In the reporting quarter, provisions and contingencies declined by 85% year-on-year to ₹34 crore from ₹224 crore.

Seshadri further said that remittances were strong, which is reflected in the bank's NRI balances, which have grown significantly.

"Our NRI book now accounts for about 12% of total deposits. We estimate remittance growth to be in the range of 70-90% year-on-year, driven by strong inward flows," he added.

The board also recommended a dividend of ₹0.45 per equity share for FY2025-26, subject to approval of shareholders.

Shares of South Indian Bank ended 3.81% up at ₹42.51 apiece on the BSE, while broader Sensex closed 1.22% higher at 77,958.52.

(Except for the headline, Fortune India has not edited the content of this PTI report.)