CARE Ratings has upgraded the Basel III Tier-II bonds of South Indian Bank Ltd from CARE A+ to CARE A–, along with a Stable outlook. This marks a move up in investment-grade quality following improvements in operational and financial metrics South Indian Bank+12Care Ratings+12BlinkX+12.
Key Strengths Supporting the Upgrade:
- Strong Capital Base: Post equity infusion in FY24, South Indian Bank’s Capital Adequacy Ratio (CAR) reached 19.31%, with a Tier‑1 CAR of 17.98% as of March 31, 2025 Care Ratings.
- Asset Quality Improvement: Gross NPA reduced to ~3.2% and Net NPA to ~0.92% by March 2025, with increased provisioning coverage and lower slippage ratios Care Ratings.
- Diversified Loan Book: Advances grew 10% YoY to ₹85,682 crore by March 2025, with higher exposure to retail, MSME, and gold loans, reducing dependency on corporate loans Care Ratings.
- Profitability Uptick: Profit after tax rose from ₹1,070 crore in FY24 to ₹1,303 crore in FY25. Cost-to-income ratio improved from 61.5% to 57.2%, and ROTA exceeded 1.0% Care Ratings+1.
CARE noted regional concentration—63% of business conducted in South India—and pressure on net interest margin (NIM) as monitorable risks in the near term Care Ratings+2idbitrustee+2.
Source (full link):
https://www.thehindubusinessline.com/money-and-banking/care-upgrades-south-indian-banks-credit-rating/article69883047.ece
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