Tamilnad Mercantile Bank Ltd (TMB) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator: Ladies and gentlemen, good day, and welcome to the Q2 and H1 FY '27 earnings conference call hosted by Tamilnad Mercantile Bank Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. On the call today, we have the following management representatives: Mr. Salee S. Nair, Managing Director; Mr. Vincent Devasy, Executive Director; Mr. Sanjay Kumar Goyal, Chief Financial Officer. I now hand the conference over to Mr. Salee S. Nair, Managing Director from Tamilnad Mercantile Bank Limited. Thank you, and over to you, sir.
Salee S. Nair (Tamilnad Mercantile Bank Limited): Thank you. Thank you very much, and thanks for attending this con-call from the Tamilnad Mercantile Bank. And I'm sure most of you have already seen our results on the website and on the exchanges. The quarterly performance has been as anticipated, and we have been maintaining the trend of growth. That we delivered last quarter, we have actually exceeded that. And this is something that we have been doing it quarter after quarter for the past seven quarters, I think it's the eighth quarter where we have exceeded our previous previous performance. And to to delve into some of these highlights very clearly the growth has accelerated. And the profit is at record level. And when we look at the business growth itself, the total business growth 27.2 5% year-on-year, which is almost three times our own 10-year CAGR of 9.41%. So this CAGR is also moving up on the on the on the on the basis of the rising growth. And this growth is highest year-on-year growth in the last 18 years. So that's something that we are fairly proud of. And it's also 8% faster than the industry. So the delta today in terms of growth is 8% over the industry's growth that TMB has delivered. And this growth has driven a strong net profit, the highest ever 451 crores highest-ever net profit. And that net profit has come out of the core business growth. These are not on account of exceptions. These are largely driven by the core business that core that by a very strong net interest income. Apart from that let me also say that the the the strength that we are adding to the balance sheet in terms of other measures is one of them we have taken is looking forward into the ECL norms that will come on on the 1st of April 2000 27, we have in anticipation, provided fully SMA-1 and SMA-2 as per ECL norms. Okay, that's something that we have done this quarter. If you recall, in Q1 of the current year, FY 27, we had also provided fully for the stressed non-fund facilities. So that was last quarter. This quarter SMA-1 and SMA-2 we have fully provided as per ECL norms. And of course, the NPA the gross and net continues to decline. The net NPA is at zero point
Salee S. Nair (Tamilnad Mercantile Bank Limited): 14%, the capital adequacy is at 32.39%. The balance sheet has also moved up quite sharply to by 24.49% year on year. And this has resulted in the overall growth and the profits has resulted in in an ROE of 16.92%. Quarterly earning per quarterly earning per share is at 28.49 rupees and and the shareholders' fund is today 12.53 of the balance sheet. Just to give you a little more color on on on the numbers itself. The total business stands at 130,237 crores, which is up 27.25%. And contributed by deposits growing at 25.49% at which stands today which stands at 69,546 crores and advances up 29.32% are standing at 60. 60,691 crores. CASA has grew 16.26. RAM at 28.96. And on the earning side, as as I said, that the profit has been delivered on a strong net interest income, the net interest income for the quarter stands at 807 crores up 35.17 crores. The operating profit is 642 crores. Operating profit after expenses, 642 crores, up 41.80%. As I said earlier, the net profit is record. The highest ever that the bank has clocked at 451 crores, up 42.09% year on year. And ROA the return on assets stands at 2.18% ROE 16.92%. So, that's where we stand. Of course, when you look at you know, the cost to income, it is 38.28%. That's where it stands as on 30th of September. The unsecured exposure is a is a is a bare 20 basis point. We our RAM focus continues. It stands at 94.33%. The net interest margin is year on year up 36 basis. Stands at 4.19%. Sequentially, it stands at we have lost 10 basis. It was 4.29% for a and I did explain why it was 4.29% last quarter in the last concall. Profit per employee stands at almost 35 lakhs and that is up 36.45%. Gross NPA 0.61% and net NPA 0.14%. The credit cost is at 9 basis point, 0.09%. And the slippage is again 6 basis point. The PCR, on book PCR is 77.49 and the overall PCR is at 96.61%. SMA0, 1, 2, I repeat, it is 0 included. SMA 0, 1, 2 is at 1.67%, which is that if you look at your NPA of 0.61% and SMA of 1.67%, your portfolio at risk one day today on 30th of September was at 2.28%. As I said earlier, the stressed NFA, we have provided 100% and SMA1 and 2, we have also provided 100% as per the ECL norms. So, just to run through the some of the numbers, CASA at 16.26% is the growth. Term deposit, the total term deposit growth of 25.49% percent has been driven by the term deposit which is stands at almost 29%. And if you look at the number itself, I think the non-callable deposit, share in the incremental term deposit, incremental term deposit for the half year stands at 7,570 crores. 40.62% of that came in the form of non-callable deposits. As As you are aware, non-callable deposits are deposits which cannot be paid before the maturity. So, there is no prepayment of that. So, from that perspective, the this deposit makes our resource security that that much more stronger. SNRR, we did about $51.94 million, not something that we we can drag home about,
Salee S. Nair (Tamilnad Mercantile Bank Limited): The overall the SNRB deposit base, for deposit growth has been 47.14%. So SNRB is not one of the better stories that we want to put on the table. It's just about 51.94 million dollars. And, the advances 29.32% riding on the RAM. If you look at MSME, as I promised, as, has inched up and today stands at 23.62%. We also have the, I think there is a lot of talk going on on the gold loan portfolio. The gold loan portfolio we've put out our sensitivity on it at 20% our 3.13% of our gold loan will be, above the market. It is just a 3.13%. The portfolio, LTV stands at 62.33 35%. The overall the portfolio is at about 48%, almost stable. It was about 47 something earlier, it's about 48 now. Unsecured exposure remains minimal at 20 basis points. So, when I get into some of the ratios I'll just take it, I take you through some of the ratios. The fresh slippage, I just mentioned, six basis. Before I come to the ratios, let me also give you some color on the expected credit loss. We've calculated, we have done a calculation of the impact as of 30th of September '26, that comes to about 384 crores. The new norms are expected credit loss would be 385 crores. And, I think if you'll check into the slide 29 we've given a color of how we intend to tackle it. We are already, our provisions, you know, are done this quarter, last quarter, and the existing contingency provision together today covers almost 80% of that at 304.24 crores. So, on the, on the, on the ratios, cost of deposits, has moved up. Yes, one of the reason is that it is moving our share of term deposits. As you can see, the CASA has moved up only 16.26% where our term deposit actually grew close to 29%. So, it is having an impact on the cost of deposit at 5.85%. This was anticipated and we have tweaked our advances portfolio to cover for this increase because our focus has been, more on the resource security for our growth and, we anti- anticipating that we did tweak the advances and and, has that also shows up in the yield on advances which has moved up to 10.32% from the 10 from 10.10% earlier. Cost of funds is at 5.93. We have picked up almost 1,000 crores of refinance during the quarter at 7 7.5%, it's also pushing up the cost of funds. And, consequently the NIM, sequentially, has come down about 10 basis. But it's still on a, on a, on a, year-on-year basis it's still significantly 36 basis up. And, credit cost, like I said, is just 9 basis points. Credit cost, here, capital, [laughter]
Moderator: Sorry to interrupt. Just to confirm, are the management there, because we're not able to hear you. Team, just to confirm, are you still there, because we are not able to hear you. Ladies and gentlemen, we'll request you to please stay connected while we reconnect to the management. Thank you.
Moderator: Ladies and gentlemen, we have management connected with us. Over to you, team.
Salee S. Nair (Tamilnad Mercantile Bank Limited): Yeah, sorry, I think we got lost, a very, very strange in these kinds of robust networks. But just to take you back, I think I'll just, you know, I'm sure most of you would have heard where I I crossing of, some of the numbers, but I take you through back once again from expected credit loss. Our calculations show that expected credit loss for the bank is 385 crores. And like I said, last quarter we had, we did provide fully 100% of the non-fund facilities which are under stress. This, this quarter we have provided 100% for SMA1 and 2 as per ECL norms. So, a total upfront provision that we are back for the ECL, is, is 54.24 crores and along with the existing contingency provision available of 250 crores, we have a provision available of 300.24 crores against the 385 crores that is required to cover the expected credit loss. That's almost a provision of almost 80%. I was also telling you about, the cost of deposits which have moved up 5.68, percent to 5.85% that is anticipated. When you look at your, your, term deposit moving up almost 29% and the CASA moving up at a slower pace at 16.26%, the cost of deposit is was, was anticipated to go up. We did, like I said, anticipate, and we tweaked our advances portfolio to, to guard against that, and that is also having an impact in the advances portfolio built, where it has moved up from 10.10% to 10.32%. Cost of funds at 5.93, we did pick up for some refinance in the quarter from SIDBI at about 7% to 7.5%, and that slightly pushed it up. the NIM consequently is at 4.19%, is up, 36 basis on a year-on-year basis, but sequentially as the term deposit portfolio is improving, it has actually gone down about 10 basis points. Also, the credit cost, our credit cost is at nine basis. Capital adequacy at 32.39 basis. And cost to income ratio, like I said, it has consistently been, you know, moving down, trending down and stands at 38.28%. PCR at 77.49% that is the on-book PCR. And I can also tell you that, you know, our leverage and, you know, NSFR, LCR, etcetera, on a, on a, on a good footing. Our leverage ratio against what is required to be done at 3.50%, our leverage ratio stands at 11.4 11.99%. And LCR is at 1 second. is at 139.43% and NSFR is at 146.15%. We have also given you some color on where, how the CD ratio can move forward, to what extent we have cushion left. And that's also there in the presentation if you refer. Page number 33, the CD ratio that's possible for us given the fact that our net worth today has 12.53% contribution to the balance sheet, we can go up to a CD ratio of 98%. And today the CD ratio stands at just 87.27, which is better than
Salee S. Nair (Tamilnad Mercantile Bank Limited): last quarter. The profit per employee, has gone up from 35% to 35 crores. The business per employee stands at, sorry, the profit per employee goes up to 35 lakhs, sorry. It's not crores, it is lakhs. But business per employee is at 25 crores. We did open nine branches in the half year, and we are committed to open 60 and process is on for the other branches to be opened. Year-on-year, we did open about 37 branches and 15 of these branches was opened outside the state of Tamil Nadu. And when we end the year, 60 branches, we hope to open 20 plus, 20 plus branches outside the state of Tamil Nadu. So, I think we have also given you some color of the kind of structural changes we are making in the presentation. I think you can go through that and there are other questions, we are we are we are here to answer them. So, over to you guys. Thank you.
Moderator: Thank you. Team, shall we begin with the question and answer session? Yeah, please.
Moderator: Thank you so much. Ladies and gentlemen, we'll now begin with the question and answer session. Anyone who wishes to ask a question, may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. [Music] First question comes from the line of Darshan Deora with Invest Group. Please go ahead.
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