South Indian Bank's Q4 Net Plunges By 19% To Rs 124.6 crore For Q4FY14 On YoY Basis

South Indian Bank (SIB), one of the oldest private sector banks in India based out of Kerala posted a bad set of numbers in fourth quarter of FY14. Net profit of the bank is down by 19% on yearly basis to Rs 124.6 crore for Q4FY14 compared to Rs 153.83 crore recorded during Q4FY13. Beside muted growth in net interest income, fall in the other income and increase in tax burden led to such fall in the net profit of the bank. 

The net interest income of the bank has increased by mere 9.3% on yearly basis and stood at Rs 364.68 crore for Q4FY14. Other income, which formed 9.4% of the total income in Q4FY13, fell to 6.9% in recently concluded quarter and in absolute amount it has dropped by 20.2% and stood at Rs 96.58 crore for the fourth quarter of FY14. 

Total tax burden of the bank increased by 4.82 times on yearly basis and stood at Rs 52.04 crore for Q4FY14. The fall in the net profit was partly arrested by lower provisions on yearly basis. Provisions and contingencies for fourth quarter of FY14 remained at Rs 28.28 crore compared to Rs 65.89 crore provided by bank's previous year same quarter. 

The asset quality of the bank has improved for the quarter on both sequential as well as on yearly basis. Gross non-performing asset (NPA) has declined by 22% on sequential basis and was at Rs 432.62 crores for Q4FY14, net NPA in the same period has declined by 28%. Even as percentage of gross advances and net advances, gross NPA and net NPA has declined by 47 basis points and 40 basis points respectively on quarterly basis.

The board of the bank has also recommended dividend of Rs 0.8 per share of face value of Re one for FY14. 

Shares of the SIB are currently trading at price to book value of 0.9 times, looks undervalued, however, the subdued financial performance along with improving asset quality, we feel that the shares of the bank is likely to see marginal uptick in tomorrow's trade.