T N Merc. Bank Q2 FY27 Results (NSE: TMB)
Signal: Earnings grew
The read
The core trajectory remains constructive: total income grew 26.57% YoY, NII 35.18%, operating profit 41.80% and PAT 42.08%, while GNPA improved to 0.61% from 1.01%; however, the ₹1,545 lakh penalty-provision reversal and negative H1 operating cash flow mean earnings quality needs confirmation beyond this quarter.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹2,052.4 Cr | +26.57% | +7.98% |
| EBIT | ₹641.55 Cr | +41.80% | |
| Net profit | ₹451.14 Cr | +42.08% | |
| EPS | ₹28.49 | +42.09% | |
| EBIT margin | 0% |
P&L walk
Total income rose 26.57% YoY to ₹205,240 lakh and net interest income rose 35.18% to ₹80,717 lakh, driving operating profit up 41.80% to ₹64,155 lakh; PAT grew 42.08% to ₹45,114 lakh, helped additionally by a ₹1,545 lakh reversal of provision against a disputed penalty.
Segments
Retail Banking is the clear driver, contributing ₹148,575 lakh of revenue and ₹51,959 lakh of segment result, up 29.07% and 56.20% YoY respectively; Treasury revenue fell 14.82% YoY to ₹38,784 lakh and its result fell 57.05% to ₹2,620 lakh, partially offsetting retail momentum.
Key positives
- Net interest income reached ₹80,717 lakh, +35.18% YoY, outpacing total-income growth of +26.57%.
- Retail Banking segment result rose to ₹51,959 lakh, +56.20% YoY, and contributed the majority of total segment result.
- Asset quality improved materially: GNPA declined to 0.61% from 1.01% YoY and NNPA to 0.14% from 0.26%; PCR without technical write-off rose to 77.49% from 74.36%.
- Advances grew 29.70% YoY to ₹6,042,904 lakh against deposit growth of 25.44% to ₹6,954,583 lakh, while capital adequacy remained strong at 32.39%.
Key concerns
- H1 operating cash flow was negative ₹187,935 lakh versus negative ₹153,611 lakh YoY, despite PAT of ₹86,265 lakh, reflecting cash absorption by advances, investments and other assets.
- Treasury segment result declined 57.05% YoY to ₹2,620 lakh, limiting the benefit from retail-led growth.
- Provisions rose 67.02% YoY to ₹3,342 lakh even as reported asset quality improved, partly reflecting ₹2,888 lakh of incremental standard-asset provisioning.
- Operating expenses grew 12.78% YoY to ₹39,786 lakh, with other operating expenses up 15.74% YoY to ₹20,477 lakh.
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