South Indian Bank share in focus after record Rs 426 crore Q2 profit, margin at 3.33%

South Indian Bank shares are in focus after the Kerala lender reported the highest quarterly net profit in its history. The bank's board approved results for the July-September quarter on Thursday, October 15, 2026, showing net profit of Rs 426.13 crore, up 21.3% from Rs 351.37 crore a year earlier. Net interest income rose 38% to Rs 1,116 crore and bad loans fell sharply. On the day of the results, the South Indian Bank share rose as much as 4.6% to Rs 51.92 on the NSE before giving back part of the gain. It was the first set of results under new Managing Director and CEO Mahesh Muralidhar Pai, who took charge on October 1.

For a mid-sized private bank, the most striking number is the margin. A net interest margin of 3.33%, against 2.80% a year ago, means the bank is earning noticeably more on each rupee it lends than it pays on deposits. It explains why net interest income rose 38% while loans grew about 19%.

The clean-up of the loan book is the second big story. Gross bad loans have fallen to 1.24% of advances from 2.93% a year ago, and net bad loans are now almost negligible at 0.09%. A bank with less stress on its books needs to set aside less money for losses, which feeds straight into profit. South Indian Bank, which traces its history to 1929, spent years dealing with high bad loans, so the improvement marks a turnaround.

Management has also raised its growth guidance for the year to 16-17%, from 15-16% earlier, according to reports on the earnings call.

The stock's reaction was positive but measured. Shares jumped early on results day and then pared gains, which suggests some of the good news was already priced in after a run-up earlier in the month, when the bank's quarterly business update had lifted the stock. Nirmal Bang had a buy rating with a Rs 62 target as of July, but investors will watch whether the higher margin can be held as interest rates change.

Short-term: The record quarter puts South Indian Bank among the stronger performers in this results season for mid-sized private banks. Watch for brokerage target revisions, and note that stock markets are shut on October 20 for Dussehra and reopen on October 21.

Long-term: If margins stay above 3% and bad loans stay low, the bank can fund faster growth without straining its capital. The first quarters under the new chief executive will show whether the strategy changes.

Who is affected: South Indian Bank's shareholders and depositors; borrowers in Kerala and other states where the bank operates; investors tracking mid-sized private banks; and the bank's new leadership team.

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