SOUTH INDIAN BANK

Chairman Mr. Amitabh Guha in 2016 said that the bank has shown a strong performance.
Further, emphasis was made on this one particular statement by the chairman “Your bank has
been effectively leveraging technology to serve its client better” which aligns with the vison
and mission of the bank where in the main focus was deploying best available technologies in
order to be the most preferred bank in terms of customer service. Building strong network 8h
branches across India was one of the main goal which is being worked upon. Leveraging on
technology has been very essential in order to serve the client better and as said above the bank
focuses more on the technological aspect, they were one among the first to upgrade to Finacle-
10 version. The issue of NPA’s in the Indian banking sector has become headaches to the bank,
the number of defaults have been increasing year on year and in order to prevent this SIB came
up with robust risk management structure. Mr. Guha said in coming years the increase in
working population and growing disposable incomes will raise the demand for banking and
related service and there will be a robust growth in housing and personal finance as well. South
Indian Bank is committed to upholding highest standards of Corporate Governance by ensuring
integrity in financial reporting, disclosure of information, improvement of internal controls and
sound investor relations. SIB is slightly shifting its business focus on from corporate books to
retail book.

Mr. Salim Gangadharan in 2018 chairman speech said that the bank has fairly been successful
in spotting sustainable and profitable business opportunities and in responding promptly to our
customers. The retail banking continues to be the focus of the bank to fulfil its 2020 vision of
becoming a retail banking power house. SIB has remained committed to providing outstanding
services and quality experiences. SIB has been upgrading to cutting edge technology platforms
and have been continuously evolving. Robust risk management systems help us ensuring long-
term sustainability and steady growth .The path ahead for SIB is based on well-defined risk
appetite and risk management policies and practices, optimal capital allocation framework and
compliance.

SIB has planned to double the size of their balance sheet and has set a target of reaching 2 lakh
Cr business focusing mainly on Retail banking. In terms of technology they are doing fairly
well, recently the latest version of CBS was installed, SIB’s internet banking and mobile
banking platform has had a good response and they have been constantly upgrading
technology. In terms of risk management policy the bank is again doing fairly well. The bank
has already created pan India network and is constantly working upon building network which
is a good sign. With many problems such as deposits growth at slow pace, CASA deposits have
been slower, increase in the net NPA, profit fall in march quarter (38%) due to rise in bad loans
almost makes its 2020 vision far from its reach.

No , South Indian Bank is not a nationalised bank, Its a major private sector bank headquartered
at Thrissur in kerala, India .

One of the earliest banks in South India, "South Indian Bank" came into being during the
Swadeshi movement. The establishment of the bank was the fulfilment of the dreams of a group
of enterprising men who joined together at Thrissur, a major town (now known as the Cultural
Capital of Kerala), in the erstwhile State of Cochin to provide for the people a safe, efficient
and service oriented repository of savings of the community on one hand and to free the
business community from the clutches of greedy money lenders on the other by providing need
based credit at reasonable rates of interest.

Translating the vision of the founding fathers as its corporate mission, the bank has during its
long sojourn been able to project itself as a vibrant, fast growing, service oriented and trend
setting financial intermediary

The Kerala-based bank with over two-third concentration in the southern markets has hired International Finance
Corporation to advise it on rejig and prepare a roadmap to achieve the targets.

BRANCHES : 870

SERVICE BRANCHES : 4 EXT.COUNTERS : 53

ATM-1315,CDM/CRM-85

South Indian Bank Limited

NSE: SOUTHBANK

12.50 INR −0.050 (0.40%)

Vision

To be the most preferred bank in the areas of customer service, stakeholder value and corporate
governance.
Mission

To provide a secure, agile, dynamic and conducive banking environment to customers with
commitment to values and unshaken confidence, deploying the best technology, standards, processes
and procedures where customer convenience is of significant importance and to increase the
stakeholders’ value.
Porters competitive strategy

COST LEADERSHIP

In cost leadership, South Indian Bank can set out to become the low cost producer in the
Regional Banks industry. How it can become cost leader varies based on the Financial industry
forces and structure. In pursuing cost leadership strategy, company has to assess – pursuit of
economies of scale, proprietary technology, supply chain management options

DIFFERENTIATION

South Indian Bank can also pursue differentiation strategy based on the Regional Banks
industry forces. In a differentiation strategy South Indian Bank can seek to be unique in the
Regional Banks industry by providing a value proposition that is cherished by customers. South
Indian Bank can select one or more attributes in terms of products and services that customers
in the Regional Banks values most. Technology,

FOCUS - COST FOCUS & DIFFERENTIATION FOCUS

The generic strategy of Focus rests on the choice of competitive scope within the Regional
Banks industry. South Indian Bank can select a segment or group of segment and tailor its
strategy to only serve it. Most organization follows one variant of focus strategy in real world.

a) In cost focus a South Indian Bank can seek a cost advantage in its choses segment in
Financial sector.
b) In Differentiation strategy company name can differentiate itself in a target segment in the
Financial sector.

5 forces

Threat of new entrance – low - Despite the regulatory and capital requirements of starting a
new bank, between 1977 and 2002 an average of 215 new banks opened each year according
to the FDIC1. With so many new banks entering the market each year the threat of new entrants
should be extremely high. However, due to mergers and bank failures the average number of
total banks decreases by roughly 253 a year. A core reason for this is, what is arguably, the
biggest barrier of entry for the banking industry, trust. Because the industry deals with other
people's money and financial information new banks find it difficult to start up. Due to the
nature of the industry people are more willing to place their trust in big name, well known,
major banks who they consider to be trustworthy.

Competitive rivalry – high – banking is one of the most competitive industry today, and is no
longer just limited to giving loans or opening a/c its versatile now. Competition no wis being
attractive and innovative in order to bring products to suit customers need. Customer wants
best service at lower rates at a fastest pace.,RBL, KARNATAKA BANK LAKSHMI VIILAS,
Samasta Microfinance and Suryoday,, city union bank, fusion micro finance, ujjivan. They do
this by offering lower financing, higher rates, investment services, and greater conveniences
than their rivals.

Bargaining power of suppliers - Capital is the primary resource on any bank and there are
four major suppliers (various other suppliers [like fees] contribute to a lesser degree) of capital
in the industry.

1. Customer deposits. 2. mortgages and loans. 3. mortgage-based securities. 4. loans from other
financial institutions.

By utilizing these four major suppliers, the bank can be sure that they have the necessary
resources required to service their customers' borrowing needs while maintaining enough
capital to meet withdrawal expectations.

The power of the suppliers is largely based on the market, their power is often considered to
fluctuate between medium to high.

Bargaining power of buyers – med

There are a lot of banking and financial service provider in the market today, switching cost
are very low as well all services provided by SIB are provided by other major banks as well.
So the competition is now on the speed and effectiveness of the service provided especially for
high margin corporate clients. Reducing service charges etc are being done to attract the
customers to some extent, bargaining power is high.
Availability of substitutes

Some of the banking industry's largest threats of substitution are not from rival banks but from
non-financial competitors.

The industry does not suffer any real threat of substitutes as far as deposits or withdrawals,
however insurances, mutual funds, and fixed income securities are some of the many banking
services that are also offered by non-banking companies.

There is also the threat of payment method substitutes and loans are relatively high for the
industry. For example, big name electronics, jewelers, car dealers, and more tend to offer
preferred financing on "big ticket" items. Often times these non-banking companies offer a
lower interest rates on payments then the consumer would otherwise get from a traditional bank
loan.

SWOT

First among private sectors to open nRI BRANCH IN 1992

Brands catering to different customers segments within Regional Banks segment - South
Indian Bank extensive product offerings have helped the company to penetrate different
customer segments in Regional Banks segment. It has also helped the organization to diversify
revenue streams.

- High margins compare to Regional Banks industry's competitors - Even though South Indian
Bank is facing downward pressure on profitability, compare to competitors it is still racking in
higher profit margins.

- First mover advantage in the increasingly crowded market place. The new products are
rapidly increasing South Indian Bank market share in the Regional Banks industry.

- Strong brand recognition - South Indian Bank products have strong brand recognition in
the Regional Banks industry. This has enabled the company to charge a premium compare to
its competitors in Regional Banks industry.

- Market Leadership Position - South Indian Bank has a strong market leadership position in
the Regional Banks industry. It has helped the company to rapidly scale new products
successes.
- Track record of innovation - Even though most players in the Financial strive to innovate,
South Indian Bank has successful record at consumer driven innovation.

Wide geographic presence - South Indian Bank has extensive dealer network and associates
network that not only help in delivering efficient services to the customers but also help in
managing competitive challenges in Regional Banks industry

Global presence

Stats of network 8h branch

8th largest branch network among private sector banks in India

First Kerala based bank to implement Core Banking System.

Weakness

Gross Margins and Operating Margins which could be improved and going forward may
put pressure on the South Indian Bank financial statement.

- High turnover of employees at the lower levels is also a concern for the South Indian Bank
. It can lead to higher salaries to maintain the talent within the firm.

High cost of replacing existing experts within the South Indian Bank. Few employees are
responsible for the South Indian Bank's knowledge base and replacing them will be extremely
difficult in the present conditions.

Less promotional activities

Bank is not willing to go beyond conservative concept of banking which affected growth

Declining market share of South Indian Bank with increasing revenues - the Regional Banks
industry is growing faster than the company. In such a scenario South Indian Bank has to
carefully analyse the various trends within the Financial sector and figure out what it needs to
do to drive future growth.

Opportunities

Growing income levels and population

Local Collaboration - Tie-up with local players can also provide opportunities of growth for
the South Indian Bank in international markets. The local players have local expertise while
South Indian Bank can bring global processes and execution expertise on table.
- Opportunities in Online Space - Increasing adoption of online services by customers will
also enable South Indian Bank to provide new offerings to the customers in Regional Banks
industry.

- Customer preferences are fast changing - Driven by rising disposable incomes, easy access
to information, and fast adoption of technological products, customers today are more willing
to experiment / try new products in the market. South Indian Bank has to carefully monitor not
only wider trends within the Regional Banks industry but also in the wider Financial sector.

Rapid Expansion of Economy As the US economy is improving faster than any other
developed economy, it will provide South Indian Bank an opportunity to expand into the US
market. South Indian Bank already have know-how to operate into the competitive US market.

THREATS

Exposed to risks such as credit risk, market risk and operational risk—use risk mangt

Growing technological expertise of local players in the export market - One of the biggest
threat of tie-up with the local players in the export market for South Indian Bank is threat of
losing IPR. The intellectual property rights framework is not very strong in emerging markets
especially in China.

Shortage of skilled human resources - Given the high turnover of employees and increasing
dependence on innovative solution, company name can face skilled human resources
challenges in the near future.

Competitors catching up with the product development - Even though at present the South
Indian Bank is still leader in product innovation in the Regional Banks segment. It is facing
stiff challenges from international and local competitors.

Visibility of bank has to be improved.

Pestel framework

Banks are unable to behave independently and must provide services based on specific laws
that affect their growth and offerings.

Political factors: A tool for the big guys

The banking sector looks all powerful — but it’s susceptible to a bigger giant: the government.
Government laws affect the state of the banking sector. The government can intervene in the
matters of banking whenever, leaving the industry susceptible to political influence. This
includes corruption amongst political parties, or specific legislative laws such as labor
laws, trade restrictions, tariffs, and political stability.

Economic factors: Easily influenced

The banking industry and the economy are tied. How income flows, whether the economy is
prospering or barely surviving during times of recession, affects how much capital banks can
access. Spending habits, and the reasons behind them, affect when customers borrow or spend
funds at banks. inflation leads to increased rate of interest

Additionally, when inflation skyrockets, the bank experiences the backlash. Inflation affects
currency and its value and causes instability. Foreign investors think twice before providing
their funds when a particular country’s currency value is high.

Exchange rates also affect banks globally — stable currencies such as the US dollar impact
other currencies, spending habits, and inflation rates in other countries.

Sociocultural factors: Consumers want ease

Cultural influences, such as buying behaviors and necessities, affect how people see and use
banking options. People turn to banks for advice and assistance for loans related to business,
home, and academics. Consumers seek knowledge from bank tellers regarding saving accounts,
bank related credit cards, investments, and more.

Consumers desire a seamless banking experience. And technology is developing to allow

consumers to buy products easier, without requiring assistance directly from banks.

Technological factors: Smartphones to the rescue

Once, it was expected to visit the local bank to make changes to financial accounts. But not
anymore.

Technology is changing how consumers handle their funds. Many banks offer a mobile app to
witness accounts, transfer funds, and pay bills on smartphones.

Smartphones can scan cheques, and the bank can process it from their end, at their location.
This change helps to save paper and the need to drive directly to the branch to handle these
affairs.
Debit cards are also changing. Chips have been implemented, requiring users to insert their
card into debit machines rather than swiping them. Other countries, such as Canada, have
implemented a “tap” option — tapping the debit card onto the device, requiring no pin, for a
transaction to complete. These changes make it easier on the user to make purchases without
required intrusion from banks.

Even banks themselves are utilizing technology within the workplace. Telecommunicating
through virtual meetings is being embraced. It replaces the need for in-person meetings.

Legal factors: Strict guidelines

The banking industry follows strict laws regarding privacy, consumer laws, and
trade structures to confirm frameworks within the industry. Such structures are required for
customers in the allocated country and for international users.

Environmental: Reduced footprint

With the use of technology — particularly with mobile banking apps — the use for paper is
being reduced. Additionally, the need to drive directly to a branch to handle affairs is
minimized as well.

Many issues are taken care of through mobile apps and online banking services. Consumers
can apply for credit cards online, buy cheques online, and have many of their banking questions
answered online or by phone. Thus, reducing individual environmental footprints.

In conclusion…

The banking industry is held accountable by the government. What and how they offer services
is determined by politics and current governmental laws. Additionally, banks are at the whim
of the economy — inflation rates can devastate banking prospects as it affects the value of
currency.

Technology is helping consumers spend and save money with readily available apps and online
services. For many daily transactions, it isn’t required for users to visit their branch anymore.
This, in turn, saves the use of paper and gas spent from driving to and from banking locations.

Legally, banks regard consumer laws, trade agreements, and privacy laws. They also must have
top-notch cyber security with the growing use of technology with banking transactions.

TOWS matrix
 1. Strengths–Opportunities. Use your internal strengths to take advantage of
opportunities.

2. Strengths-Threats. Use your strengths to minimize threats.

3. Weaknesses-Opportunities. Improve weaknesses by taking advantage of opportunities.

4. Weaknesses-Threats. Work to eliminate weaknesses to avoid threats.

Despite the challenges and stress faced by the banking industry during the year under review,

your Bank had achieved a net profit of Rs 247.53 crore for FY 2018-19. The net profit for the

previous financial year was Rs. 334.89 crore.

The Bank has put in place adequate internal control measures and processes with respect to its

financial record keeping procedure to provide reasonable assurance regarding the reliability of

financial reporting and the preparation and presentation of financial statements. The processes

and controls are reviewed periodically and strengthened wherever considered necessary. The

Bank also ensures that internal controls are operating effectively, through the robust internal

inspection and vigilance system. A separate compliance department is ensuring that all

regulatory norms are followed both in letter and spirit.

During 2018-19, your Bank took multiple initiatives aimed at preparing itself for accelerated

growth with a focus on achieving the vision i.e 'to be the most preferred bank in the areas of

customer service, stakeholder value and corporate governance'. Your Bank has been fairly

successful in visualising business opportunities and in responding promptly to provide our

customers a different banking experience. Your Bank continues to connect our customers

seamlessly, while creating growth opportunities for ourselves along the way. I am quite positive

that your Bank will emerge as resilient in the coming years. Your Bank has been effectively

leveraging technology to serve its clients better. Emerging technologies have changed the

banking industry radically through digitization and networked banking platform.

I solicit continued support from valued shareholders such as yourself and all other stakeholders

for the journey forward.

Board

VG Mathew – ceo

Salim gangadharan – chairman

Independent director – john, joseph, ranjana, George

Non executive director – pradeep, achal kumar,

DEPOSITS 80420 CR u

NET PROFIT 247.53 d

TOTAL BUSINESS OF THE BANK 1,44,056.04 CR u

CASA GROWTH 17K TO 19,467 CR u

Early recovery of NPA through prompt and effective measure under SARFAESI Act

506 cr worth npa recovered whereas the target was 500CR

Today the bank has a robust technology framework which caters to all customer requirements
and provides quick turnaround time.

Internet Banking – Sibernet v Mobile Banking – Mirror + v Variants of VISA, Mastercard &
Rupay Debit Cards

The

Bank has put in place an integrated risk management policy

which ensures independence of the risk governance structure.

As on March 31, 2019, the Bank had 8,440 personnel on its rolls average age of employees as
33 years
REFER INVESTOR PRESENTATON

The FIRST Kerala based bank to implement

Core Banking System

Structure – board members

Skill – sib belives that skills are an integral part oft the bank and the employees are appointed
with specific skills required to perform it operation

Mangt staff -1500

Post grads – 1250

Ca 60 cs 5

SIB belives dynamic world where an individual defines the organisation, Human Resource
(HR) is the most valuable asset. . Achievement

of an organisation’s objectives depends on the individual and

the collective efforts of its workforce

Style

Transformational style a study said

Strategy

Expand retail bs – investing in brand building, training and recruiting work force, advancement
of tech

Strength sme base – sole banker to SME for all bankin needs

Improve CASA – improvement in products, stratergy and road map set to achieve target,

Enhance asset quality – cautious approach on lending to corporates, special cell yo monitor
NPA

System

Technology risk mangt , Control system

The bank has very good control systems in all areas of its operations, its make continuous
reviewfrom time to time, And has adopted very strict measures to maintain its work standards,
Staff above

Shared value vision

Implementation of Process Automation Solution

South Indian Bank is the first bank to be certified as EMV

enablement as Issuer on ATMs.

Fraud Risk Management (FRM) Solution

The elevated provisions for NPAs have dragged down the net profit of the private sector lender
South Indian Bank (SIB) in the third quarter of FY19. The bank posted a 27 per cent drop in
PAT at ₹83.85 crore vis-a-vis ₹115 crore in the corresponding period of the previous fiscal

VG Mathew, MD & CEO, said that the bank has reckoned IL&FS exposure of ₹400 crore as
NPA

Net NPA increased from

`1,415.80 crore as on March 31, 2018 to `2,163.62 crore as

on March 31, 2019.

The Business Intelligence and Analytics Department was formed

in April 2018, with the primary objective of accelerating and

improving decision making, optimizing internal business

processes, operational efficiencies, driving new revenues and

gaining competitive advantage over business rivals and thereby

achieving the pre-determined corporate goals in an engineered

manner.

YES

ICRA downgrade

Borrow default 1400 cr

3 year low

first ever quarterly loss,