Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
South Indian Bank Ltd (NSE: SOUTHBANK) Q3 2026 Earnings Call dated Jan. 16, 2026
Corporate Participants:
P R Seshadri — Managing Director and Chief Executive Officer
Analysts:
Jay Mundra — Analyst
Digant Haria — Analyst
Vidisha — Analyst
Darshil Dhaveri — Analyst
Suraj Das — Analyst
Unidentified Participant
Darshan Deora — Analyst
Presentation:
Operator
Ladies and gentlemen, Good day and welcome to South Indian Bank Q3FY26 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will win the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star than zero on a touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Jay Mundra from ICICI Securities Limited. Thank you. And over to you, sir.
Jay Mundra — Analyst
Yeah. Hi. Thanks Ikra. Good afternoon everyone and thanks for joining the call. On behalf of ICICI securities, we welcome you all to Q3FY26 post reasons post earnings conference call of South Indian Bank. From the management side we have with us Mr. P.R. Shishadri, M.D. CEO, Mr. Dolphy Jones, Executive Director. Mr. Anto George T, Chief Operating Officer, Mr. Vinod Francis, the CFO and Mr. Jimmy Matthew, GM and Company Secretary and other senior officials. I’ll now hand the conference over to management for their opening remarks post which we can start the Q and A session.
Thank you. And over to you, sir.
P R Seshadri — Managing Director and Chief Executive Officer
Thank you very much, Jay. Thank you all for joining our call today. As Jay has mentioned, I am joined by all the colleagues that Jay mentioned in the opening remarks in the room with me and on the phone lines elsewhere. So once again, thank you very much for joining us today. Let me start this call by highlighting our performance for the quarter ended December. The bank declared a net profit of 374 crores for the quarter registering a growth of 9% compared with 342 crores in Q3 FY25. Total deposits grew by 12% to 118,211 crores from 105,387 crores.
On a YoY basis, gross advances grew by 11.3% to 96,764 crores from 86,999, 966 crores. On a YoY Basis. During March 2025, the bank had technically written off rupees 900 crores. Had it not been done, the YoY growth for this quarter would have been 12.4%. Total business for the bank grew by 12% to 214,975 crores. Pre provisioning, operating profit for the quarter grew by 11% to 585 crores from rupees 529 crores. Net interest margin for the quarter stood at 2.86% which is an improvement of 6 basis points on a sequential basis.
The bank declared a return on assets of 1.7% and return on equity of 13.49% for the December quarter. Capital adequacy ratio for the bank is at 17.84% and the Tier 1 ratio stands at 16.88% as at December 31, 2025, CASA balances grew by 15% year on year to 37,640 crores versus the earlier figure of 32,830 crores. Provision coverage ratio excluding write off improved by 1177 basis points YoY to reach 83.5% and PCR including write off improved to 91.57%. During Q3FY26, the bank declared a return on assets of 1.07% and return on equity of 13.49% for the December quarter.
Slippage ratio reduced by 17 basis points from 33 basis points in Q3FY25 to 16 basis points in Q3FY26. Overall gross NPA reduced by 163 basis points from 4.3% to 2.67% on a YoY basis. Net NPA reduced by 80 basis points from 1.25% to 45 basis points on a YOY basis. Let me now take you through the other operational and financial performance indicators of the Bank. We continue to grow our Gold loan business which now stands at 21,303 crores with an average LTV of approximately 55%. This includes portfolios that may have been acquired by the bank and an average ticket size of approximately 2.46 lakhs.
The gold loan book grew on an annualized basis by 26%. We continue our focus on MSME and retail. MSME business loans now stand at 14,019 crores which is a growth of 12% excluding the write off done during March 2025. Mortgage loans which are mainly given to MSME is mapped in the investor deck given to you under the retail segment and if this were to be remapped to MSME, the YoY growth would stand at 14%. Retail segment continues to grow for us it has grown yoy at 23%. The home loan book as at December 2025 is 8430 crores.
The auto loan book is 2393 crores as at December 2025. Our PL loan book stands at 2217 crores. This quarter we also saw Good traction on the disbursal of MSME and retail including gold segments on a yoy basis. MSME in this case including lap disbursements grew by 45% year on year and retail loans including gold disbursements grew by 60%. These numbers are available in the investor deck for you to view. We hope to continue to maintain the momentum in disbursements and collections in the coming quarters and to achieve our desired outcomes.
With this, we open the floor for questions. Thank you.
Operator
Can we open the floor for question and answer?
P R Seshadri — Managing Director and Chief Executive Officer
Yes, we can mention how to do that by dialing which numbers that you can just mention.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star n1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Digantharya from Green Edge Wealth. Please go ahead.
Digant Haria
Hi. Thank you for the opportunity and congratulations on the good performance. The first question is, you know, last quarter and maybe you know, even to the quarter before that. You know, you said that in Q3 is when you may look to revise or you know, keep the guidance of 12% asset growth. You know, you would like to give any guidance on the loan growth.
P R Seshadri
We had said that we would do 12% and actually we have done 12%. If you were to add back the write off that we’ve done in Q3, I mean in March of 2025, which is roughly 900 crores added back, we would be 12.43% year on year. So on a like, for like basis we have done 12% and we think that this being the busy season, the Jan to March quarter, there’s a likelihood that we, you know, we will participate in the increased demand for loans and have outcome better than that. So what we said the last time around was that we want to be 12 and over.
So we are still sticking to that.
Digant Haria
Okay, okay. No, I’m asking this because on the retail part especially gold loans is doing very well for the industry. Like you know, banks are growing say 10%, 15% on a QoQ basis. So in that context it’s a very good time for that retail portfolio of ours. So I just want to know the corporate and retail portfolio, the retail mix still doesn’t shift. The corporate still continues to be around 40%. When do we See that shift really happening over next 12 months, 18 months, or will it be much longer where we see that shift?
And second, is that in gold loans, are we thinking of capping our gold loan exposure to something? Because I think we can grow much faster but we will somehow constrain our gold loan growth.
P R Seshadri
So with respect to the second question, first, at this juncture we have not put any, imposed, any caps. Our total exposure of gold loans to our total book is roughly about 22%. So we are monitoring it very closely and we’ve built new risk measurement mechanisms so that we can see how much risk we are taking, especially against volatility in gold prices. But this is something that we have been dialoguing with the board and it’s a decision that you’ll have to take as to what level we need to cap this, if at all.
So at this juncture, as I mentioned, we are not capping. With respect to the second question, this quarter we had 5% sequential loan growth only. I think approximately a fourth of the loan growth has come from the corporate end and even that is on the transactional banking side. So core corporate book has not grown the way we reported to you. The investor deck includes both our transaction banking balances and the corporate banking balances. So the growth has been on the transaction banking balance and the level of growth there has been just, you know, has been a smaller component of the total growth.
So as a consequence there has been a realignment in the overall book and which is what has led to our increase in NIMs, etc. So over time you will see this happen. I think. The size of our balance sheet and the fact that we are mainly reliant on our own branches to actually deliver business volumes imposes certain restrictions on how quickly we can alter the mix. But that’s definitely what we’re trying to do and you will see a shift as we go quarter on quarter on quarter. In the medium term I think we would near, I mean head towards 33%, 1/3 corporate and the rest being retail.
MSME and Aggie, thank you.
Digant Haria
Thank you sir for the detailed response. The last question, if I may, in the last five quarters our loan book has, you know, probably grown by say 15, 16% and our NII, the net interest income, we have again clawed back to that all time high of 882 crores. Now will it be fair that next 3, 4 quarters at least, whatever the loan book grows, our NII also keeps pace with that.
P R Seshadri
I think that would be a fair comment to make. We’ve absorbed 125 basis points reduction in NIM. And as we go forward we are entering a relatively favorable phase for deposits. While there is going to be a 25 basis points reduction in the repolling book at the same time approximately a fifth of our deposit book will also get repriced by approximately 80 basis points. So given all of that we think that we’ve hit basically a plateau at this point in time on account of the most recent repo reduction.
Please remember that we pass on the repo rate cut to our customers on a T +1 basis. So as far as you know from South Indian Bank’s point of view, the regulatory aim of transmission is achieved on the first day after the repo rate announcement. So therefore the full impact of the 25 basis points will be felt by us this quarter. But we think that we should be able to sort of manage that or account the repricing on the deposit book. There will of course be this overhang of the repo rate cut. But having said that, we don’t think it should materially alter our means for the quarter.
And going forward, subject of course to no further repo rate cuts, we think that the net interest margin that we report will start climbing as the book starts.
Digant Haria
Perfect. Thank you. All the best.
Operator
Thank you. The next question is from the line of Videsha from CR Kothari and Sons. Please go ahead.
Vidisha
Hello sir. I have two questions. So one on the nim. So what kind of NIM margin do we expect ahead and what will be the contributor to the same? Like in this quarter we saw that the yield that you charged that also dropped while the cost of borrowing rose slightly. So what is the NIM trajectory expectation here?
P R Seshadri
I couldn’t hear you very clearly so I. I will paraphrase what I thought I heard. You said that you want to know where the NIMS will be and. You know, cost of cost of our borrowings. I think that is the second question that you are now with respect to nim. I think going forward, subject to no further rate tax, our NIM will pay stabilize during this quarter. There will be some slight downward pressure on account of the 25 basis points reduction that we’ve had on account of December. But that will be countered largely by the fact that we have approximately 20% of our deposit book getting repriced during this quarter.
So we think that we should remain stably at the level that we are. There may be some marginal movements but we don’t think that’s going to be very. At least that’s the current view. But there is a downward, how should I put it, there is a bias of it being moving downwards on account of the 25 basis points. Now with respect to, you know, cost of deposits, cost of deposits have been coming off. So they came off 7 basis points during the last quarter from 5.41% to 5.34%. Now I think the number that you’re looking at is cost of funds which also includes certain other activities that we do, including our borrowings on the repo market and so on and so forth and the borrowing for purposes of reinvestments and so on and so forth where there is a three basis point upward movement from 4.74% to 4.77%.
I don’t think that is a very material number or material change for us to be worried about because that is driven by opportunities on a short term nature. I think the more important number to be looking at is a 5.41% to 5.34% which is a 7 basis point reduction in cost of deposits which from our point of view is moving in the right direction.
Vidisha
And on the GNP and MNPs, the GNPA dropped from 4.4 last year to now approximately 2.9%. So what led to this drop and do we expect it to continue over here in these levels?
P R Seshadri
So gross NPA on a year on year drop is also partially contributed by a write off of 900 crores during March of 2025. So that’s 100 basis points reduction in the book itself. So from 4.5 that would have brought it down to three and a half. The rest is on account of excess of recoveries over new NPA approved. So our NPA slippage rate is at 16 basis points for the quarter not annualized. So on an annualized basis we are at 64 basis points and recoveries have been significantly larger than NPAs and as a consequence of which these numbers move in the direction that you mentioned.
Vidisha
All right, so we expect it to stabilize at these levels coming ahead.
P R Seshadri
We expect these numbers to continue to improve in the near term and so you will see them trending downwards.
Operator
Thank you. The next question is from the line of Jay Mundra from ICICI Securities. Please go ahead.
Jay Mundra
Yeah, hi sir. Sir, I wanted to check for the last 8, 9/4 or maybe 10/4 we have done ROA at 1%, nearly 1% or maybe 1.05% with now NIM pressure behind hopefully and growth also picking up in Gold and MSME. You know, how far are we from let us say maybe 1.3 kind of an ROA depending on the loan mix or you think that, you know the current run rate will come, will continue and I mean where are we on, you know, step up on roi? Thank you.
P R Seshadri
Thanks Jay. As far as we are concerned I think we will operate in the 100 to 115 basis point points. In the near term I think there will be quarters in which there are other income sources that take us upwards. But I think what is going to happen is as the NIM sort of stabilizes and there are no further rate actions from the Reserve bank of India at that point in time because of the robust portfolio growth that we are adding, we will see return on assets inching upwards. So I would, you know, if I were to hazard a guess In a 12 month period we should end the 12 months at about 1.15 to 1.2 or thereabouts.
Beyond that I am not at, you know in a. I do not have a crystal ball to give you a, you know us when we’ll hit 1.3 in Chenning.
Jay Mundra
Sure sir. And and lastly sir, if you can quantify the impact, I mean if you have any trade relief managers portfolio RBA had given some dispensation and if you can sort of provide some sensitivity to the export portfolio. Right. Given the global uncertainty on the trade. Thank you.
P R Seshadri
So good question. We were not getting too many requests for you know accessing that those release that the government of India has provided. We are now beginning to get a fuel. So as of this moment I think about 16 of our customers have asked us to take a look at whether they can access this funding source. The exact quantum of that I do not have at this point in time. But from our point of view the portfolio is continuing to look robust. We are not seeing any trend lines that are worrying right now.
Obviously all these exporters had orders that they fulfilled and I think the importers also had certain commitments or also had inability to actually switch suppliers very quickly because of the fact that the current Indian suppliers were certified and were producing to a particular standard and so on and so forth. So but if this situation were to continue in the long run, I guess given the steepness of the tariff, alternate sources will be found by the importers. So therefore these persons will Certainly the situation is that the new credit that is being provided under the new scheme provides for an ROI advantage to to the customer and many of many customers are also trying to access that on account of the fact that it gives an interest rate benefit.
So I’m not entirely in a position to isolate. How many of these customers see this request as a potential method of dealing with stress and how many of them are seeing it as a method of actually reducing their carrying cost of debt? So it’s a mixture of both. We are looking at it very closely. And as of this juncture, as I said earlier, we don’t see any material deterioration in our portfolio.
Jay Mundra
Sure. Thank you, sir. All the very best.
Operator
Thank you. The next question is from the line of Darshil Dhaveri from Crown Capital. Please go ahead.
Darshil Dhaveri
Hello. Good evening, sir. Thank you so much for taking my question. So some of my questions have already been answered. So just want to know what kind of, you know, what’s our guidance in terms of credit cost for this year and maybe next year if you can, you know, help us understand that.
P R Seshadri
You know. So you’re asking for credit cost as opposed to slippage?
Darshil Dhaveri
Yeah,
P R Seshadri
I think the credit cost for this year that you see will be broadly in line with what you’re seeing right now. Nor are the slippages likely to change in the near term this quarter. We don’t expect very significant change. So right now, the way the portfolio is behaving, and given the fact that slippages are in the 15, 17 basis point range, credit costs would be maybe half that. So seven, eight basis points would be the credit cost in the near term next year. Numbers are being worked out, but we don’t see it materially changing from where we are unless there is a very significant event in the marketplace and unless some of the events that Jaime, the previous gentleman I was talking about, create some form of adverse conditions which is not currently visible.
So as we get into the next year, we think that the current trend lines where the recoveries are greater than the new NPA slippages will continue over the next 12 months.
Darshil Dhaveri
Okay, that helps a lot, sir. And so just wanted to understand, like. In terms of competition majorly, like maybe in the retail segment and, you know, gold loan, like, a lot of players want to get into that and are trying to aggressively grow out there. So how do we see that? Like, is there, like, what’s the. Is there some kind of undercutting happening or, you know, is there enough pie in the market for everyone? Just if you could help me, you know, understand the, you know, competition intensity in retail and especially retail gold, Sir.
P R Seshadri
I think, you know, we. What we’ve done during the year is we’ve broadened our product pallet, we’ve increased the types of offerings that we have. We’ve taken advantage of the new RBI regulation that allows us to do loans productive purposes where the LPV caps can be laxed a little bit. So we built our new Systems, new processes, etc. Which has enabled us to compete more effectively in the marketplace. We are now launching ULI based accurate Andhra Pradesh. We’re starting with Tamil Nadu and then we roll it across to other regions as well.
So we’ve increased the product types that we have, which is enabling us to sort of speak more efficiently when it comes to price competition. There is price competition, but this is a product that is in some senses a relationship product and it’s also a trust product. So people come to a bank that they’ve trusted and because they’re leaving their goals there, they like to know that when they come back it will still be available. And since we operate a great deal in semi urban and rural areas, trust requirements.
Operator
Ladies and gentlemen, the line for management has been disconnected. Please stay connected while we get them reconnected. It. Ladies and gentlemen, thank you for being on hold. The management has been reconnected. Thank you. And over to you sir.
P R Seshadri
Thank you. I tried answering the earlier question. I don’t know whether I answered it fully because I kept talking and I didn’t know whether I was disconnected. So maybe you could tell me where.
Darshil Dhaveri
I think the trust of the customer is there. So that’s why, you know, Gold Loan. There is no, that’s a usp I think till that we vote for.
P R Seshadri
Okay. So I think trust is an important element and the fact that we’ve been around in those geographies for a long time, which is a part of trust, I guess is also an important element. And plus processes, you know, if you’ve got the processes down pat, then it helps. We write approximately three to four thousand gold loans a day. So when you are doing those volumes, you need to do them relatively efficiently. And I think those are areas where we’ve spent some time and energy sort of getting things right.
So price, pricing, competition is there. I’m not saying it is not there, but it’s not insurmountable.
Darshil Dhaveri
Fair enough for that. That’s helped me. Sir, can you hear me? Sir? Hello?
P R Seshadri
Yeah, I can hear you loud and clear.
Darshil Dhaveri
Yeah, yeah, yeah, fair enough. So that covers a lot of my questions. So there’s one more thing like in terms of partnership, like you know, are we looking at, you know, like when we said we are trying to grow mostly from our own branches, so are we looking at some, you know, other way of partnership or you know, even like in the credit card segment, you know a lot of people are coming with co branded credit cards. So are we looking at some other ways to you know penetrate in these other categories?
With the help of partnership, sir.
P R Seshadri
So we have an active strategic alliances, you know department which works on building relationships between us and other counterparties. In page 27 of our deck you will see a list of counterparties that we work with currently. So we have, we are taking advantage of RBI scoring co origination guidelines and we do have an active partnership, you know program. Our current balances on these partnerships is in. Is approximately 1900 crores or thereabouts ex credit cards.
Darshil Dhaveri
Okay. Okay. Fair enough. Yeah, that’s it from my side. So thank you so much. All the best.
Operator
Thank you. The next question is from the line of Suraj Das from Sundaram Mutual fund. Please go ahead.
Suraj Das
Hi. Am I audible?
P R Seshadri
Yes you are.
Suraj Das
Yeah. Hi sir. Thank you for the opportunity. A couple of question first on the MSME portfolio. I think the MSME portfolio has seen revival and then has started to grow for past couple of quarters. And I think this is despite you classifying mortgage loan given to MSME under retail. So just wanted to check if you can highlight let us say what are the sectors or product or what are the geographies which is driving this. And also I mean what is your outlook on this growth going ahead? That is question one, sir.
P R Seshadri
Okay, thank you very much. I think MSME growth is actually quite broad based. It’s across various categories. We manage MSME in two buckets. The first bucket is what we originate in our branches. What we call, you know we internally we call it nbg. And the second is what we manage through relationship managers which are, which is a separate vertical. And both of these have been growing quite well. The MBG piece is the one that we are more keen on growing because the yields there are give us a clear NIM of 400 to 500 basis points.
And these are smaller ticket which means that the risk is diversified. And we so far we’ve hit a peak disbursal of roughly 300 crores in the month of December. We are hoping to double that with changes to our policies, practices and also with increased sales effort because that is going to be a huge driver of revenue for the institution as such. And that product works on a templatized mode where we have credit scores that run and these are all digitally underwritten and they have reasonably quick turnaround time.
And we leverage as much data as is possible from GST data to tax return Data to bank account data and so on and so forth to arrive at a score that tells us whether the customer is bankable or not. And it is there that we’ve had very significant growth in volumes. And all of this is originated by us. We don’t pay any origination commissions and so on and so forth. So the economics for us is very, very positive. The second area which I said is what we call emerging corporate business. These are the bigger tickets which is written by our, by the verticals there also we’ve had very substantial growth on a year on year basis.
And there it is fairly broad spectrum of businesses that come to us from working capital to term facilities to fund working capital gap to brownfield entities that are setting up incremental capacity to lease rental, discounting and so on and so forth. So it’s a broad mix. Of course the yields here are lower. I want to reiterate that we trade off price for better quality. So we are aiming to get high quality, slightly better yields than what we’ve been achieving in our book. So the aim is not to increase risk density or riskiness of our portfolio at all, but to manage risk in such a fashion that we get an alpha on the yields and as a consequence an alpha on interest, on net interest margins.
So I trust that answers your question?
Suraj Das
Yes sir, that, that answer. So out of this 1700 crore or 1800 crore disbursement that he was seeing on the MSME currently the MBG group contributes only 300 crore.
P R Seshadri
No, no, that was in one month. That was in the month of September. December.
Suraj Das
So
P R Seshadri
The exact numbers we can make available, I don’t have it with me. The breakup. Yeah, sure sir,
Suraj Das
Sure. The second question is on the housing side. I mean while the lab portfolio is doing well, the housing finance growth seems to be a bit volatile. I think this quarter it has again regrown. The growth has been negative on a QQ basis. Is this a function of portfolio buyout or something like that? Or what is the rational, sir? Or probably what are. There are two
P R Seshadri
Things that were driving it. There were two things that were driving it. One is yes, there is some portfolio transactions that IBPC stroke portfolio buyout transactions which are reflected in one period and not in another. But the broader problem is that yields on housing finance, especially prime housing finance, have dropped to a very, very low level with nationalized banks now operating at 7.1% and some of them are even sub 7%. So we during this quarter, because of the repo rate cut in the month of December were from A management standpoint wondering whether we wish to participate or didn’t wish to participate and if we wish to participate at what level we wish to participate.
Now housing loans are very very price sensitive. They were good housing loan customer will go where the prices are lowest. So as a consequence of that we did lose volume in December. And I think frankly strategically we have to decide at what levels we wish to participate here. And at those levels the business may or may not be available in the type that we want to do. So that’s one of the reasons why this has happened.
Suraj Das
Sure sir, got it. The third question is in terms of let us say the entire co lending partnership that you have at present. What is the mix of the co lending partner in the disbursement for the let us say the retail segment saying gold loan or unsecured retail. This Amazon tie up, Axio pay tie up or on the overall let us say how much portfolio buyout you do.
P R Seshadri
We can make that available. It’s not readily available. With me we can get the data and give it to you. The overall book size is roughly approximately 1900 crores. A fair chunk of it is going to be gold. So roughly about 1500 crores to my estimation would be gold and the rest would be unsecured and housing. So that’s where we are at at this point. But the disbursal numbers are not readily available.
Suraj Das
Sure sir, I’ll get in this offline. And the last question in terms of this non interest income the other line item, I mean on the investor deck 32 the other line item is almost 40 50% of your overall non interest income. And that has been the case for last few quarters. Sir. Any specific line item which contributes the more Here.
P R Seshadri
I turn this over to my colleague Vinod Francis, our CFO to answer this question for you. Thank you.
Darshil Dhaveri
Good afternoon. Two one, two major item that comes is one is the income what we derive from the bank assurance business and other one is recovery from the technically return of accounts. These are the two major line item that come constitute in that other income others.
Suraj Das
Okay, sure. Got it sir. Thank you so much.
Unidentified Participant
Okay, thank you.
Operator
Thank you. The next question is from the line of Darshan Deora from Invest Group. Please go ahead.
Darshan Deora
Yeah, thank you for the opportunity. Just had a question on this MSME loans. I was looking at slide number 15 of the presentation. You know you’ve given that table giving a breakdown of the MSME loans. So just want to understand, you know. So in one row we have MSME SME loans about 9,800 crores. And the other, there’s another row that says other. So is the first one, you know what sir was explaining the MDG group and the second one, you know, the relationship managed loans. Is that the breakup?
P R Seshadri
Okay, so you know, we’ve sort of broken it down the way we reported to the Reserve bank of India. Nowadays to meet priority sector requirement we need UDVM Aadhaar numbers. So the first number, MSME SME AS was appropriate identifier to prove that they are MSME. Second category does not have pilots. They are MSMEs. They don’t have those. So therefore it’s been reported separately. It also includes some transaction banking products, basically bills discounted against LCS also is a part of the settlement.
Darshan Deora
So you know, if we were to just, you know, take the split of the MBG versus what you had called out as the emerging corporate business, what would the split be?
P R Seshadri
We’ll make that available and going forward we’ll present it in the deck.
Darshan Deora
Yeah, you know, it would be great if, you know, we could even include the mortgage business which you said is being shown under detail. You know, just for I understand this is for RBI classification purposes but just, you know, for the investors to also understand. Because I believe the company has put a lot of effort in, in terms of retraining employees, etc. So just wanted to, you know, see that, how that is progressing, the color you can share on that as well. Like, you know, the efforts and the investments we have made both on the employee side as well as the technology side, you know, how is that progressing in terms of traction?
P R Seshadri
We’ve spent a lot of time and energy rejecting our processes as well as our systems. So in the deck you will see a lot of new systems that have gone live over the last 24 months or so. These are all for different products, we have different systems. So for working capital facilities, small businesses, we have something called GSP Power. For lap, we have something called LAPP Power. These are all journeys in a fully digital mode that enable people to actually navigate this and get outcomes reasonably quickly.
So that those have been live now for a long period of time and our people have gotten used to them. We’ve also been spending a lot of time and energy retraining our staff. We’ve been sending our folks for intensive work classroom sessions outside of our offices, third party locations where they can learn more about MSME businesses. So those are all now beginning to pay off because our people are now slightly better educated on the needs of MSMEs. So we will break up the Slide show you the difference between the emerging corporates as well as our branch based businesses in the succeeding quarters so that that information is available.
Darshan Deora
Great, great. That would be much appreciated. And my second question was just regarding the overall loan growth, you know, so you know we are going as per our guidance, we’ve hit roughly the 12% figure. What will it take for us to sort of move to the next orbit, like to move towards a 15% loan growth figure?
P R Seshadri
See, I think we have to trade this off. We have to figure out whether that is better for us or to remain at this 12% level. So if you were to look at our cost of money, it’s actually lower than many of our peers. So we have a natural funding advantage. If we were to start growing very rapidly, we lose that because we will have to offer deposit rates which are to deposit rates offered by other people. Right now we are priced 15 basis points lower than our larger peer in our main market. So even with that pricing disadvantage we grow at about 12%.
So strategy that we are currently following is to grow at this level but grow the retail MSME gold much more. Which means that over time corporate will start shrinking that we believe will have a bigger delta on the NIMS and profitability for the institution. There will come a point in time where our ability to grow will be significantly higher than what it is currently. At which point in time we will step up, we go into the next year. Our growth will increase from here. But we don’t want to take it to 20% and so on and so forth because that is going to be counterproductive from a PNL standpoint.
Darshan Deora
Got it, got it. That was very helpful and wish you and the team best of luck for the next quarter.
P R Seshadri
Thank you.
Operator
Thank you. Requesting the management members to please speak a little louder as when you’re speaking. Then there is some buzzing sound is coming from your line. Please increase your device’s volume. Sir.
P R Seshadri
Yes ma’, am, can you hear me now?
Operator
Yes sir. Yeah, yeah, it is clear now. Thank you sir. Thank you. The next question is from the line of Paz M from 361 Capital. Please go ahead.
Unidentified Participant
Thanks a lot. So my first question has been declining.
Operator
Sorry to interrupt card. We are unable to hear you.
Unidentified Participant
Hi. Hi ma’, am, can you hear me now?
Operator
Yeah, please go ahead.
Unidentified Participant
Yeah, yeah. So for my. My first question is that your credit card book has been consistently declining. What, what exactly is happening? Delinquencies or are you know, we rejigging that portfolio? That’s my question. 1. Second is interest on income from you know, at around 490 highest. So what exactly is driving this? And my third question is, you know, slippages within the retail portfolio from the new, you know at around 93 crores for the quarter, you know, slightly higher than previous quarter.
So what, which, which segments are driving this? Yeah, those are my three questions.
P R Seshadri
Okay. With respect to the cards business, as you’re aware we had a relationship with an external counterparty who was providing all the services associated with business. And From March of 2024 onwards fresh issuances have been stopped. We had engaged with both the counterparty as well as the regulator to try and have it restarted but we have not had any success on that front. We are at this point in time working on alternate strategies as to how we can reenter card basis. And that’s point number two.
I mean point number one. Point number two. We couldn’t quite hear what you said so I will go directly to point number three and then come back to point number two. Now majority of the losses that we have in the new book, roughly half of it is from the credit card business and, and a small portion of it is also from our portfolio buyouts. So we did see elevated losses on portfolios acquired by us by way of a BA transaction in the past. So this has been a significant increase in those losses that we noticed which is embedded in the 155 crores of slippages that we’ve had.
17 crores comes from portfolio purchases made which is actually quite a small portfolio. So we are looking into it carefully to understand if there are any issues that we need to be worried about. The rest of it is coming from personal loans and other such products. So those are non material. So to repeat, 50% comes from credit cards. 17 crores come from portfolio buyout. The rest is personal loan and other such products. Can you hear me?
Unidentified Participant
Yeah, yeah, yeah, sure sir. And my last question on interest on income from investment of 497crores,
P R Seshadri
That is. The one that we were not able to hear.
Unidentified Participant
Okay so, so I’ll repeat also income from interest on investments, what exactly is driving this? Because you know at 497 crore, you know it’s highest in the last, I guess last eight to 12 quarters.
P R Seshadri
That’s because the investment book itself has grown quite considerably or if you see the investment group last quarter it grew by what 7000 crores or so and it has, while it shrunk a little bit between the prior quarter and this quarter it is still an elevated level. So consequently we are getting higher Interest coming.
Unidentified Participant
Sure sir. Thanks. Thanks.
Operator
Thank you. The next question is from the line of Bhavya Sanghvi from Alchemy Capital. Please go ahead.
Darshil Dhaveri
Thank you for the opportunity. Sir. My question is regarding the series show. So we see that the CD ratio has been inching up quite well. So I wanted to get a sense. From you as to what would be. The, you know, sustainable level that a bank is thinking to take this. And a connected question is how the bank is thinking on the liability side growth to support the deposits as the growth of deposit has been 6% CAGR in the last three years to fund the loan book growth in the future. Thank you.
P R Seshadri
Thank you very much for that question. With respect to CB ratio, we are approximately 82% or so at the end of last quarter. We think that there’s still some headroom available there. We can get to 85, 86. You know. The same time we’ve also started looking at alternate funding sources. So we have tapped other funding sources which are non reserve requiring. But from liquidity management standpoint, I think we’ve done reasonably well. While CAGR over a three year period may be low, year on year our liabilities have grown approximately 12% with the same ballpark range as our assets have grown.
And as I mentioned earlier, we are growing this while keeping our cost of deposits under sites checked. So our belief is that if you were to pay higher rates we can get higher liability growth but that will militate against having higher NIMs. So in order to manage both of them we are sort of optimizing our asset growth in such a fashion that the liability and asset growth is roughly of the same amount and our total CD ratio remains within reasonable bounds.
Darshil Dhaveri
Sure. Thank you sir. And any specific targets on branch expansion in the next couple of years that bank is thinking about. Thank you. That’s all from mine.
P R Seshadri
We have not grown our branches in the last two years or so. We will be expanding, doing some amount of branch expansion especially in our core areas which is Tamil Nadu, Andhra Pradesh, Telangana, Karnataka. But those plans are in the future. In the near term there may be 10 or 12 branches that are built.
Suraj Das
Thank you.
Operator
Thank you. The next question is from the Lila. Ravindra, an individual investor. Please go ahead. Ravindra, your line is unmuted. Can you hear us? As there is no response from the participant, we will move forward. We’ll take this as a last question for today. I would now like to hand the conference over to management for closing remarks. Thank you. And over to the management.
P R Seshadri
I’d like to thank all the folks who attended this call for being here with us. Thank you very much for taking time to attend our call and having interest in talking. Thank you very much.
Operator
Thank you all on behalf of South Indian Bank. That concludes this conference call. Thank you all for joining us today. And you may now disconnect your lines.