Hold South Indian Bank - Emkay - Q3FY12 Result Update

South Indian Bank
Reco: HOLD
CMP: Rs 23
Target Price: Rs 25

Risk to margins; Downgrade to HOLD

- SIB’s Q3FY12 results inline with expectation with NII at Rs2.7bn and Net profit at Rs1.02bn. The growth was also aided by 20.4%yoy growth in Non interest income to Rs599mn

- The NII grew by 33.5%yoy to Rs2.7bn led by strong ~30.6%yoy growth in advances, and 8bps qoq expansion in NIM’s to 3.05%

- High concentration of gold loan at 26% of the book, a concern. Change in mgmt strategy to shift focus from gold loan to corp loan, could put pressure on margins

- Elevated risks coming out of concentration in gold loan portfolio in terms of loan growth as well as NIMs. Downgrade to HOLD with revised PT of Rs25.

Source : Equity Bulls

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