South Indian Bank CEO PR Seshadri said credit costs are currently low at three basis points [1] but are unlikely to sustain.
This outlook suggests a potential shift in the bank's risk profile. If credit costs rise, it could impact the institution's profitability and influence how the bank manages its loan portfolios in a volatile global economy.
Seshadri said that the bank has not seen major negative trends or a significant rise in working capital demand [1]. Despite these stable internal metrics, the bank's share price recently saw a decline of 1% [1].
Geopolitical instability is playing a role in the broader financial landscape. Seshadri said that if the West Asia crisis persists, capital may continue moving to safer markets like India [1]. This movement of capital can affect credit cost dynamics as the domestic market absorbs more investment.
"Credit cost is currently low at 3 bps but unlikely to sustain," Seshadri said [1]. He said that while the current environment is favorable, the bank remains cautious about long-term sustainability.
The CEO said that the flow of capital into India serves as a buffer against some regional instabilities. However, the bank continues to monitor how external crises influence internal lending costs, and asset quality.
"No major negative trends or significant rise in working capital demand visible," Seshadri said [1].
“Credit cost is currently low at 3 bps but unlikely to sustain.”
The warning regarding credit costs indicates that South Indian Bank is preparing for a transition from a period of high asset quality to a more challenging environment. By linking this to the West Asia crisis, the bank highlights how geopolitical volatility can paradoxically drive capital into India, creating a complex environment where domestic growth and global risk intersect.
