Shares of Tamilnad Mercantile Bank rose 1% on April 24 after the company posted double-digit earnings growth on the back of a sharp drop in bad debt provisions. The stock closed at Rs 407.85 on the NSE.
The private sector lender’s profit rose 11.5% year-on-year to Rs 253 crore in the quarter that ended March 23, as provisions and contingencies fell 61% to Rs 57.2 crore in the same period, although provisions and contingencies surged by 74%.
Net interest income (difference between interest earned and interest paid) increased by 8.1% to Rs 527.3 crore compared to the corresponding period of the previous fiscal year, improving NIM by 9 basis points by the end of March FY23, reaching 4.49%.
Asset quality also improved, with total non-performing assets as a percentage of total advances falling 31 basis points sequentially to 1.39%. Net NPA fell 130 bps MoM to 0.62% for the end of March FY23.
The provision coverage ratio improved from 89.83% in December FY23 to 90.90% in March FY23.
However, its non-interest income fell 14% year-on-year to Rs 183.93 crore and operating profit before provision also fell 5.15% to Rs 404.41 crore in the quarter of FY23.
Tamilnad Mercantile Bank said it had recorded the highest-ever profit of Rs 1,029 crore in fiscal 2022-23, up 25% from the previous year.
The bank also posted its highest-ever operating profit and net interest income this year at Rs 1,573 crore and Rs 2,094 crore, up 4% and 15%, respectively, from the previous year.
“At the end of March FY23, our deposits stood at Rs 47,766 crore, up 6% from the previous year, while advances rose 11% to Rs 37,582 crore over the same period,” the bank said in a filing to the exchange.