This private sector bank shares jump 11% in a weak market; should you buy?

Shares of South Indian Bank surged as much as 11 per cent to Rs 18.08 apiece on the BSE in the early morning deals on May 12, 2023, after the lender reported an encouraging set of numbers for the March quarter ended 2023 (Q4FY23) on May 11. The net profit of the bank for the fourth quarter was up by 22.74 per cent from Rs 272.04 crore in FY22 to Rs 333.89 crore in FY23. The operating profit of the fourth quarter increased by 95.02 per cent from Rs 287.94 crore in FY22 to Rs 561.55 crore in FY23, the company said in its press release. 

For the full year (FY22-23), South Indian Bank declared a net profit of Rs 775.09 crore, the highest ever in the history of the bank, the lender claimed in its press release. Growth in net profit was 1623.11 per cent compared to the previous year. The Board of Directors have also recommended a 30 per cent dividend subject to the approval of the shareholders in the AGM.

Key Ratios & other parameters:

• Return on Equity improved by 1387 bps from 6.42 per cent to 20.29 per cent Q-o-Q basis.
• Return on Assets increased by 87 bps from 0.39 per cent to 1.26 per cent Q-o-Q basis.
• NIM improved by 15 bps from 3.52 per cent to 3.67 per cent on a Q-o-Q basis.
• Net interest income went up from Rs.825.15 crore to Rs 857.18 crore, registering a growth of
• 3.88 per cent on a Q-o-Q basis.
• Focus on quality asset book as well as collection efficiency brought down the provisions from
• Rs 41 Cr in FY22 to Rs.39 Crore on Q-o-Q basis.

Commenting on the results, Murali Ramakrishnan, MD & CEO of the Bank, said that the strategy of the business had contributed to the bank's performance. During this period, "the bank could register growth in all the desired segments with a focus on building quality assets across all verticals like Corporate, SME, Auto Loan, Credit Card, Personal Loan Gold Loan etc."