Thoothukudi-based private bank Tamilnad Mercantile Bank (TMB) reported a rise of 5% in net profit and a flat growth in net interest income in the second quarter of FY26. In an interaction with Sanal Sudevan, MD Salee Sukumaran Nair spoke on the bank’s quarterly performance, interest rate outlook and its plans to ramp up AI adoption. Excerpts:
What are the reasons for the growth of the bank? What is your growth target for the year-end?
The growth has not happened accidentally. We have put in a lot of effort in the last two-three quarters. The growth is slowly moving up. Earlier in FY25, we did underperform the market and at that time, I had said that the bank’s performance would be in line with the market. But the second quarter results show that we slightly outperformed the market. In the second half of the year, we expect to do even better than the competition. We closed the quarter with 11.40% growth in total business growth -- 12.32% deposit growth and 10.34% growth in advances. We expect to close the year with a 13% deposit growth and 14-15% growth in advances. CASA has been a worry for the industry and for us. We have taken several initiatives like transaction business group (TBG), elite services group and online current account opening, which have resulted in CASA share increasing 58 basis points to 27.36%. The CASA growth in Q2 was 5.22% QoQand 9.3% YoY.
What is your target for NIM for the next quarter and financial year? Do you expect a repo cut in the next MPC meeting?
Assuming there are no repo rate cuts, we are targeting 3.85% NIM by March 2026 from 3.83%. Rate cut immediately reduces the pricing of 50% of our loan portfolio while deposits take three quarters for repricing. We are now in the happy situation where the deposits portfolio is getting repriced and the advance portfolio has already gotten repriced in.
As for rate cut, there is an expectation there will be a 25 bps cut in repo rate. But with inflation trending down and people talking about a 6-6.5% growth rate, we will have to wait and see.
What is the value of the gold loan portfolio?
We have around 34 tonnes of gold or Rs 21,000 crore of advances against gold.
What is your export credit growth status?
Our export credit portfolio is 1.05% of the overall credit portfolio worth Rs 47,000 crore. We are setting up a new business unit focusing on trade finance, forex side, etc. We hope to see this pick up in the future. On the other hand, because this number is small, Trump tariffs have not impacted us.
We do trade finance business through various branches. Now we want to have a dedicated unit that focuses on trade finance and this unit is in the process of setting it up. This unit will be completely backed by the automated process of technology from the customer to conduct transactions through SWIFT accounts.