Tamilnad Mercantile Bank Growth

Interest income grew in FY22, even as commission, exchange, and brokerage climbed due to a rise in guarantee commission, visa debit card annual fee, and a net increase in revenue on master credit cards. While profit on investment sales grew owing to the sale of HTM and government securities.

During the year, the Bank generated a turnover of Rs. 246468.88 crore in trading activities, resulting in a net profit of  Rs.72.36 crores, compared to Rs.156.90 crores the previous year. During the year, the Bank sold Rs.2999.58 crore worth of securities from the 'Held to Maturity' category.

The excellent operational efficiency and prudent cost management are principally responsible for the progressive improvement in Profit after Tax.  The company's interbank borrowings grew due to an increase in the Long Term Repo Operation (LTRO), which was repaid subsequently. Other interest expenses grew as borrowing expanded, particularly collateralized borrowing and lending obligation (CBLO) borrowings. Despite this, the company's profit has improved overall as an increase in income has effectively compensated for an increase in costs. 

The investment portfolio's average realized yield was 6.74% for the year, compared to 6.88% the previous year. The fall in portfolio yield was due to investments at current yield levels after steep decline in Yields during the year and comparatively lower returns from investments like CDs and MF due to continuous rate cut by RBI.

In FY22, the company's EPS climbed by 36.2%, and the bank is attempting to develop plans. The bank is working on the PSLCGs(Priority Sector Lending) area, and as a result of the board meeting's permission, the bank has sold PSLCs worth Rs.6.412,50 crore, generating an income of Rs.7141 crores. PSLC-Small & Marginal Farmers was sold for Rs. 1970 crores, PSLC-Agriculture was sold for Rs.941 crores, PSLC-Micro Enterprises was sold for Rs.2971.50 crores, and PSLC-General was sold for Rs.530 crores as of 31/03/2022.

Book value of the company is continuously increasing owing to rise in reserves and surplus on the account of profit transferred from P&L account.

EBITDA has seen a huge jump due to a recent increase in interest and investment income. While insurance expenses increased by 9.47% primarily due to an increase in DICGC insurance premium. Other expenditures also increased by 13.4% in Fiscal 2022 primarily on account of a loan loss provision of ₹704.86. Despite an increase in these expenses, the company has shown strong operating efficiency, which resulted in improvement in FY22.

The rise was mostly due to an increase in advances by way of overdraft, repayable loan, and government securities investments. The corporation has effectively managed its expansion in assets, as seen by the significant increase in income owing to interest on investments. As of March 22, the Bank's net investments were Rs.13,035.47 crore, up from Rs.11,703.21 crore at the end of the previous year. The bank's investment-to-deposit ratio was 29.01% at the end of the previous year, compared to 28.57% at the end of the previous year.

Company is maintaining Tier 1 ratio well above the RBI standard from last 4 years. Even its Tier 1 ratio ids above than RBI guilelines for CAR, which makes it safe and reduces the risk of insolvency.

As per RBI, Tier 2 capital should be less than Tier 1, which is beautifully maintained by the company. Even their CAR which is the overall shows capital adequacy is well above the mandatory requirement.

Tangible book value of the company is constantly increasing due to increase in statutory and capital reserves of the company. Company increased its reserves due to market volatilty to secure its depositors money.