South Indian Bank Targets 15-16% Credit Growth In FY27, MSME Loans To Rise 17-18%

New Delhi, Oct 17 (KNN) South Indian Bank is targeting credit growth of 15-16 per cent in FY27, driven by retail, agriculture and MSME (RAM) advances, which are expected to grow at a faster pace of 17-18 per cent, its Managing Director and CEO Mahesh Muralidhar Pai said.

The RAM segment accounts for around 61 per cent of the bank’s loan book. The lender plans to focus on retail lending and gold loans during the festive season.

The bank’s gross advances rose 18.67 per cent year-on-year to Rs 1,09,517 crore in the July-September quarter, compared with Rs 92,286 crore in the corresponding period last year, reported PTI.

Middle East Conflict Poses Risks

Pai said the bank’s growth projections remain cautious amid the ongoing conflict in the Middle East, which could affect the domestic economy if oil prices remain elevated.

Prolonged high oil prices could increase inflationary pressures and weaken credit quality, he said.

Pai also noted that asset quality across the Indian banking sector had improved significantly, with non-performing assets (NPAs) at historically low levels. However, he cautioned that the trend could be cyclical and might not continue indefinitely.

Focus On Retail, MSME And Gold Loans

The bank plans to strengthen its low-cost current and savings account (CASA) deposits, non-resident Indian (NRI) deposits and retail term deposits.

It also intends to gradually shift its lending focus from corporate loans towards retail, agriculture and MSME segments.

Gold loans, which account for around 25 per cent of the bank’s portfolio, will remain a key growth driver as the lender seeks to expand its presence in the segment.

Net Profit Rises 21%

South Indian Bank reported a 21 per cent year-on-year increase in net profit to Rs 426 crore in the second quarter of FY27, supported by improved margins and asset quality.

On foreign currency non-resident (FCNR-B) deposits, Pai said the bank had mobilised around USD 230 million under the scheme. As the lender does not have overseas branches, most of the mobilisation came directly from customers, with limited leverage, he added.

Pai also expects the Reserve Bank of India (RBI) to conduct another two to three rounds of open market operations to absorb surplus liquidity from the banking system.

He sees scope for two additional interest rate hikes of 25 basis points each during the current financial year.

(KNN Bureau)