Tamilnad Mercantile Bank Growth

In FY21 company has seen increase in its interest income even commission, exchange and brokerage increased on account of increase in commission on guarantee, visa debit card annual fee, and a net increase in commission on master credit cards. While profit on sale of investments also increased on account of sale of HTM and government securities, partially offset by loss on sale of investments due to market fluctuation during the normal course of business.

Interest on accounts with the RBI and other inter-bank funds, on the other hand, fell due to lower bank balances and withdrawals of money for investment/credit deployment. Nonetheless, the company's overall performance has improved.

The gradual increase in Profit after tax is primarily backed by the strong operational efficiency and conservative cost management. 

Inter-bank borrowings of the company increased due to increase in Long term Repo Operation(LTRO) which was repaid in September'20. Following a rise in borrowing, notably collateralized borrowing and lending obligation (CBLO) borrowings, other interest expenditures increased by 335.22 percent.

Rent, taxes and lighting increased by 1.63% in FY21 primarily for the rent and lighting in respect of 24 new E-Lobbies, on the other hand advertisement and publicity decreased as company undertook fewer advertising activities on account of COVID-19.

Still company has seen overall improvement in its profit as increase in incomes efficiently compensated the increase in expenses.

Book value of the company is continuously increasing owing to rise in reserves and surplus. IN FY21, due to pendemic and market volatility RBI increased CRR and SLR rates for banks where CRR saw an increase from around 3% to 4%.

EBITDA has seen a huge jump due to recent increase in interest and investment income. While insurance expense increased by 29.65% primarily due to an increase in DICGC insurance premium. 

Other expenditure also increased by 2.93% in Fiscal 2021 primarily on account of a provision of ₹ 169.90 million created for the penalty levied by the Enforcement Directorate, which was partially offset by a reduction in travelling expenses and outsourcing of ATM transactions. Despite increase in these expenses company has shown strong operating efficiency, which resulted in improvement in performance in 2nd half of FY21.

Due to covid there were certain restrictions on the company which brought some hurdles in managing the operations. Provisions and contingencies increased by 1.97% due to increase in provision for taxation and the additional provision made for standard assets on account of the COVID-19 pandemic. In accordance with RBI guidelines, bank was also required to make provisions at the rate of 10.00% of the outstanding advances over two quarters in respect of such borrower accounts where asset classification benefit has been availed, for which ₹ 70.10 million was provided as on June 30, 2020. In spite of these provisions company's performance was optimum.

Total assets increased by 11.15% from ₹ 427,587.97 million as of March 31, 2020 to ₹ 475,271.69 million as of March 31, 2021. This increase was primarily due to an increase in advances by the medium of overdraft, loan repayable and investments in government securities. Company has efficiently managed its increase in investments, as we can see a mojor growth in income of company due to interest on investments.

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 during pandemic to secure its depositors money.