Tamilnad Mercantile Bank's Q2 net rises 37.15% to Rs 262.3 crore

Tamilnad Mercantile Bank’s (TMB) net profit rose by 37.15 per cent year on year (YoY) to Rs 262.3 crore in the quarter ended September (Q2FY23), on the back of an improvement in its net interest income (NII).

The private sector lender had posted a net profit of Rs 190.74 crore in (Q2FY22), according to a filing with the BSE. The bank’s stock was trading 5.33 per cent higher at Rs 513.7per share on BSE on Thursday.

TMB’s NII was up 15.6 per cent YoY in Q2FY23 at Rs 508.16 crore. The lender's non-interest income dipped to Rs 144.8 crore in Q2FY23 from Rs 150.9 crore in Q2FY22. The lender's asset quality profile improved with gross non-performing assets (GNPAs) at 1.7 per cent till September 2022, compared with 3.31 per cent in the year-ago period. Net NPAs dipped to 0.86 per cent from 1.82 per cent.

“All the sectors have done well during the quarter. Sector wise if you look, RAM ((retail, agriculture and MSME) contributes to around 87 per cent of our portfolio. Because of the diversified MSME portfolio, we have very low NPA and credit cost is also one of the lowest,” said Krishnan Sankarasubramaniam as the managing director and chief executive officer of the bank.

The provision coverage ratio improved to 88.58 per cent for the quarter under review from 80.5 per cent a year ago. The bank’s loan book grew 10.38 per cent YoY, lower than the banking system’s pace of loan book expansion (16.4 cent YoY) in September 2022. Outstanding advances stood at Rs 34,876 crore as of September 2022. “For the current fiscal, the advances are expected to touch Rs 37,500 crore, total business may be nearly Rs 86,000 crore and we may see a profit of around Rs 1,000 crore,” he said.  

The deposits grew by 5.15 per cent YoY to Rs 43,136 crore at end of September 2022 This was lower than the banking sector deposit growth of 9.2 per cent. The bank’s total capital adequacy ratio (CAR) stood at 24.58. per cent in September 2022, up from 18.87 per cent a year ago.

On October 21, the Reserve Bank of India (RBI) had lifted its three-year ban for opening new branches by the Thoothukudi-based bank. The Bank’s shares were listed in the stock exchanges on September 15. At present, it has 509 branches -- 106 rural, 247 semi-urban, 80 urban and 76 in metropolitan. There were reports that TMB may look to add 100-150 branches in the next 18-24 months.

When asked about this, Sankarasubramaniam said that the management is set to come out with a detailed roadmap on future growth and expansion soon. Interestingly, 375 branches of the bank are located in Tamil Nadu.

 “Where I have the concentration, contributes substantially for the country’s growth. If you look into the number of branches each bank has got, I have only 375, despite being headquartered in the state. Banks from other states have more branches here and they come because they see large potential in the state. Whereever I see good potential; I will definitely be going for expansion,” he said.