TMB - Tamilnad Mercantile Bank Limited Share Price

Management's outlook for Tamilnad Mercantile Bank indicates a strong growth trajectory for the current fiscal year. They expect to achieve a credit growth of 14% to 15% and anticipate deposit growth of 12% to 13%, with a specific goal of 12% for CASA deposits. The total business has already shown an 11.40% increase, with deposits up by 12.32%.

Key forward-looking points highlighted by management include:

1. Continued expansion with the opening of 36 additional branches in the current fiscal year, building on the 22 branches opened in the first half.
2. Operating profit year-on-year shows a sanitized positive increase of 19.83%, while net profit is indicated around INR 318 crores"”a quarterly increase of 4.14% and a yearly increase of 4.73%.
3. The management expects ROA to maintain approximately 1.85% and ROE to be around 13.77%, supported by controlled credit costs and strong asset quality with GNPA and net NPA at 1.01% and 0.26% respectively.
4. The bank maintains a strong PCR of 74.36% and targets further growth in their RAM portfolio, aiming for enhanced performance in MSMEs.
5. A significant investment of INR 250 crores in IT modernization is underway to enhance operational efficiency and digital engagement.
6. Management is confident about stabilizing net interest margins to above 3.85% as deposit repricing continues beneficially.

Overall, Tamilnad Mercantile Bank positions itself for a solid performance driven by targeted growth initiatives and improved operational metrics.

Here are the key questions and answers from the Q&A section of the earnings conference call transcript:

Question 1: "Sir, my question is that this quarter, we have seen good growth in RAM, the retail, agri and MSME, especially the retail part. Will the same growth momentum continue?"

• Answer: I anticipate that the growth momentum will continue. This is not a one-off occasion; results in the next quarters will confirm this. Our initiatives, including a stronger RM base and centralized appraisals, have positively influenced our performance.

Question 2: "Would you like to give some guidance for this year FY '26? Will we achieve a 13%, 14% growth in the loan book?"

• Answer: We expect to see a credit growth of 14% to 15% for FY '26 and deposit growth of 12% to 13%, alongside 12% for CASA. Both our liability and asset sides will experience accelerated growth beyond our original expectations.

Question 3: "Regarding the shareholder case, will there be any monetary impact on our company?"

• Answer: No, there won't be any significant impact. It's a shareholder dispute and we have properly accounted for a maximum penalty of INR 2 lakhs. This is not an issue of cash transaction, nor does it involve money laundering, as confirmed by legal counsel.

Question 4: "What is the outstanding Technically Written-Off pool as of September?"

• Answer: The Technical Written-Off (TWO) pool is currently just under INR 2,000 crores. We have not moved assets out of technical write-off, which reflects historical baggage.

Question 5: "Can you mention the size of the jewel loans and the consumer loans?"

• Answer: Our jewel loan portfolio amounts to INR 21,000 crores while the consumer loan stands at INR 4,300 crores. We will continue focusing on jewel loans but are also seeing growth in non-jewel portfolios.

Question 6: "What is your outlook on the other advances portfolio?"

• Answer: The corporate book is around INR 2,500 crores. We will increase our involvement in this area after ensuring our systems and skills are up to par.

Question 7: "Can you give some insight into your IT investment and plans?"

• Answer: We plan to invest INR 250 crores in technology this year, split between CAPEX and OPEX. This investment is focused on modernizing our legacy systems and enhancing operational efficiency, with significant projects already in progress.

Question 8: "How are you managing risk from U.S. tariffs and unseasonal rains?"

• Answer: We believe our portfolio is insulated from risks due to U.S. tariffs and unseasonal rains, particularly in agriculture, as our focus is on gold-backed loans which mitigate stress factors.

These answers highlight the bank's confidence in its growth trajectory, effective management of risks, and plans for future investments, reinforcing its positive outlook for FY '26 and beyond.