Shareholders of South Indian Bank are witnessing a remarkable financial turnaround, with the bank's stock staging an impressive recovery to become one of the standout performers of 2025. After a prolonged period of selling pressure, the shares have mounted a powerful comeback in recent months.
A Stunning Stock Market Recovery
The bank's share price narrative has flipped dramatically. From hitting a one-year low in April 2025, the stock has rebounded sharply, clocking a staggering 80% gain since that low point. This surge propelled the share to an all-time high of ₹41.65 and has lifted its year-to-date return to an impressive 60%. This performance sets it up for its largest annual gain since 2022.
If the stock manages to close the current calendar year in the green—a scenario that now looks highly probable—it will mark its fourth consecutive annual gain. This winning streak would translate into a cumulative rise of 400% over these four years. The stock closed Monday's trading session at ₹40 per share.
Strong Quarterly Earnings Fuel Optimism
The rally finds solid grounding in the bank's robust financial performance for the quarter ending September 2025. South Indian Bank reported its highest-ever quarterly net profit of ₹351 crore, marking an 8% increase from the ₹325 crore profit recorded in the same period last year.
This bottom-line growth was achieved despite a dip in core income. The bank's Net Interest Income (NII) fell by 8% year-on-year to ₹808 crore. This decline occurred even as the loan book grew by 10%, primarily due to a significant compression in the Net Interest Margin (NIM), which dropped to 2.80% from 3.24% a year ago.
However, the bank adeptly managed this margin pressure through other avenues. A 26% year-on-year jump in non-interest income to ₹516 crore provided crucial support. Furthermore, a sharp 43% reduction in provisions and contingencies to ₹63 crore significantly boosted the final profit figure.
Asset Quality Shows Marked Improvement
A key highlight of the quarterly results was the continued improvement in asset quality. The Gross Non-Performing Asset (GNPA) ratio improved substantially to 2.93%. This is a notable decline from 4.40% a year ago and also better than the 3.15% reported in the preceding quarter (June 2025).
The lender demonstrated healthy growth across all major business segments, including corporate, MSME, housing, auto, and gold loans, all while maintaining a disciplined focus on the quality of its assets.
Institutional Investors Show Growing Confidence
The bank's improving fundamentals have not gone unnoticed by institutional investors. Data reveals a growing appetite for South Indian Bank shares among domestic mutual funds. As of the end of September 2025, 10 mutual funds collectively held a 10% stake in the bank, equivalent to 26 crore shares. This is up from a 9.55% stake held at the end of the June quarter.
Mutual funds have been consistently accumulating shares. Notable funds with significant holdings include the Bandhan Small Cap Fund, which owns a 4.93% stake, and the Kotak Multi-Cap Fund, holding 4.28%.
Foreign Institutional Investors (FIIs) also marginally increased their exposure, raising their stake to 17.9% from 17.6% in the first quarter of FY26. While both FIIs and mutual funds raised their holdings, retail shareholders reduced their ownership slightly to 70.2% from 71.3%, though they remain the largest shareholder group in the bank.
The combined narrative of a soaring stock price, record profits, cleaner balance sheet, and growing institutional interest firmly establishes South Indian Bank's resurgence as a major turnaround story in the Indian banking sector for 2025.
