Monday, March 30, 2009

>South Indian Bank (BONANZA)

Company Background
Thrissur (Kerala) based South Indian Bank (SIB) is one of the earliest banks in South India, came into being during the Swadeshi movement in 1928. It is mainly a strong regional player in South India. The Bank has grown gradually steadly. Presently, it has a branch network of 537 branches (including 17 extension counters), all with CBS technology.

• The bank has shown decent performance. Its profits have grown very well, from Rs.8.7 Crore in FY 2005 to Rs.153.39 Crore in FY 2008, a growth of 260% compounded. It has also shown very good improvement in Assets quality. Its Net NPA stand at 0.4% presently, down from 3.81% in FY 2005.

• SIB has been paying dividend regularly. At current price the dividend yield works out to be 6.5%, if dividend payout of Rs.3/Share is maintained.

• Bank gave 1 for 4 Bonus in Q3 FY 09.

• Bank has maintained its PLR at 16%. This should improve the net interest income for the bank.

• The bank has high capital adequacy ratio of 14.62%.

• SIB has good market share of large South India based NRIs and their families in India. It serves the niche market due to its decades old relations in specific regions. About 24% of bank’s business is from NRI market.

• SIB is a very good M&A target, due to no dominant promoter group and strong presence in South Indian market.

To see full report: SOUTH INDIAN BANK