Kerala-based South Indian Bank has hiked the marginal cost of funds-based lending rates (MCLR) by 15 basis points to 20 basis points. The new rates will come into effect from February 20th. With the latest hike in MCLR, EMIs on various loans at the bank are likely to go up.
As per the regulatory filing, South Indian Bank’s 1-year MCLR will be at 9.35% from February 20th — a hike of 15 bps from the current rate of 9.20%.
Similarly, a 15 bps hike is given on six-month and three-month MCLR to 9% and 8.80%.
Currently, the six-month and three-month MCLRs are at 8.85% and 8.65%.
On the other hand, the shorter tenures have received a 20 bps hike. One-month MCLR will be 8.70% from February 20th compared to the current 8.50%. While overnight MCLR will be 8.65% from the latest 8.45%.
MCLR is the benchmark interest rate on loans for banks. It is the basic minimum rate below which banks cannot charge interest rates on loans. Hence, MCLR is the lowest interest rate on term loans. Banks generally change MCLR on a monthly basis.
To determine the interest rates of different types of loans, the Reserve Bank of India (RBI) established MCLR back in 2016. Factors that determine the MCLR rate are —- deposit rates, repo rates, operating costs, and the cost of maintaining the cash reserve ratio.
Continuing the league of rate hike cycles like global central banks, RBI hiked the key repo rate in February 2023 policy while maintaining its “withdrawal of accommodation” stance. This month, RBI raised the repo rate by 25 bps, bringing it to 6.5%. This would be the sixth consecutive rate hike this fiscal.
At South Indian Bank, since MCLR rates will come into effect from February 20, hence, key changes in home loans, gold loans personal loans, and auto loans among others can be expected from this day onward.
In December 2022 quarter, South Indian Bank garnered the highest ever net interest income (NII) of ₹825 crore compared to ₹573 crore a year ago same period. Net interest margin improved 88 bps YoY to 3.52%. The bank posted a net profit of ₹102.75 crore in Q3FY23 compared to a loss of ₹50.31 crore in the same quarter last year.
It posted an 18.39% YoY growth in gross advances in Q3FY23. On segment-wise performance, the bank’s corporate segment was up by 47.02% YoY, the personal loan book jumped by a whopping 155.98% YoY and the gold loan portfolio soared by 32.36% YoY. The bank issued over 1.80 lakh credit cards with an outstanding book of ₹670 crore.
As of December 31, 2022, the bank’s gross NPA and net NPA stood at 5.48% and 2.26%, lower from 6.56% and 3.52% in the corresponding period of the previous year.