T N Merc. Bank Q1 FY27 Results (NSE: TMB)
Signal: Earnings grew
The read
Q1FY27 was a standout quarter: NII grew +20% YoY, operating profit surged +48% YoY due to operating leverage (opex +5.5% vs revenue +17.5%), and asset quality improved further (GNPA 0.69%, NNPA 0.17%). Credit cost rose from an exceptionally low base but remains benign.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,900.79 Cr | +17.52% | +6.07% |
| EBIT | ₹611.07 Cr | +48.22% | |
| Net profit | ₹411.51 Cr | +34.97% | |
| EPS | ₹25.99 | +34.97% | |
| EBIT margin | 32.15% |
P&L walk
Consolidated P&L driven by strong NII growth (+20% YoY) and operating leverage as opex grew only +5.5% YoY, outpaced by revenue +17.5% YoY; credit cost remained low, leading to PAT +35% YoY.
Segments
Retail Banking is the dominant driver — contributed 74.8% of total revenue and 79.5% of segment profit before tax; its revenue grew +27.4% YoY, while Treasury segment revenue declined -10.3% YoY.
Key positives
- Operating profit +48% YoY to ₹61,107 lakh — operating margin expanded 666bps YoY to 32.15%.
- NII grew +20% YoY driven by advances growth and improved NIM.
- Asset quality best in years: GNPA 0.69% (down 53bps YoY), NNPA 0.17% (down 16bps YoY), PCR improved to 75.36%.
- ROA improved to 2.14% (vs 1.82% YoY) — well above the 1.8% threshold for healthy banks.
Key concerns
- Provisions (other than tax) jumped to ₹5,393 lakh from ₹834 lakh YoY, though from a very low base; credit cost still low at ~0.09% of advances.
- Treasury segment profit declined -40.9% YoY (₹6,424 lakh vs ₹10,873 lakh) due to lower investment income.
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