South Indian Bank Q3 Update: Deposits Jump 12.17% to ₹1.18 Lakh Crore
South Indian Bank has reported a strong business performance for the third quarter of FY26, ending on December 31, 2025. In its latest update filed on January 1, 2026, the bank revealed that total deposits climbed sharply to ₹1.18 lakh crore, a rise of 12.17% year-on-year compared to the same period last year.
This growth shows that more customers are trusting the bank with their money. At the same time, the bank’s focus on low-cost funds like current and savings accounts helped to improve its funding mix.
These figures are not just numbers. They point to stronger customer confidence and a clearer path for future lending. In this article, we explore what these results mean for the bank’s performance, its competitive stance in the Indian banking sector, and why investors are paying attention now.
Deposit Growth and Funding Mix Strength
South Indian Bank’s Q3 FY26 business update showed a clear rise in deposits. Total deposits reached ₹1.18 lakh crore as of December 31, 2025, reflecting a 12.17% year-on-year increase from ₹1.05 lakh crore a year earlier. This uptick was driven by consistent inflows from both retail and corporate customers.
A standout feature of this growth was the rise in CASA (Current Account and Savings Account) balances. CASA increased by 14.65% compared to the prior year and reached ₹37,640 crore. This lifted the CASA ratio to 31.84%, up by around 69 basis points from the same period last year. A higher CASA ratio indicates that the bank is attracting more low-cost funds, which helps reduce the overall cost of capital.
This shift in the funding mix points to stronger retail trust and suggests that customers are keeping more funds with the bank in savings and current accounts rather than fixed deposits. With this improved liability base, the bank is better positioned to support credit growth while managing its interest expenses effectively.
Loans and Advances: Sustained Credit Growth
Alongside deposit growth, South Indian Bank reported healthy credit expansion in the December quarter. Gross advances rose 11.27% to ₹96,765 crore as of December 31, 2025, compared with the previous year.
The bank noted that, excluding a technical write-off of ₹900 crore from the March 2025 quarter, the underlying loan growth would be closer to 12.43%. This detail highlights strong demand across lending segments and suggests that growth is not merely due to accounting adjustments.
Expanding credit with a strong deposit base points to improved balance sheet momentum. Increased lending supports revenue generation through interest income while deposit growth strengthens liquidity. A balanced growth in both deposits and advances is a key marker of stable banking performance.
Asset Quality and Industry Context
While the December quarter update focused mainly on deposits and advances, broader sector trends provide useful context for asset quality. According to the Reserve Bank of India’s December 29, 2025, report, gross non-performing assets (NPAs) across Indian banks fell to a multi-decade low of 2.1%, with improvements seen in retail loan segments, including housing and education loans.
A resilient asset quality environment helps financial institutions like South Indian Bank maintain confidence among depositors and investors. Lower NPAs across the sector often translate into reduced credit costs and stronger capital buffers, although individual bank figures for Q3 FY26 asset quality were not disclosed in detail at the time of the business update.
Market Reaction and Stock Trends
Market response to the business update was varied. South Indian Bank stock prices in early January showed some pressure, with shares trading slightly lower ahead of the official announcement. Despite short-term fluctuations, analysts view the strong deposit and loan growth as a positive sign for the bank’s operational health.
Stock market movements often reflect investor expectations about future profitability and business momentum. In this case, the combination of rising deposits, improving CASA, and healthy advances suggests a stronger outlook for interest income and cost management.
Strategic Implications for South Indian Bank
The Q3 FY26 results reveal several strategic implications for South Indian Bank:
- Liability Quality: The notable rise in CASA balances indicates that the bank is successfully attracting low-cost funds. This reduces funding costs and supports net interest margin improvement.
- Customer Confidence: Growth in deposits and advances points to increasing trust among both retail and corporate customers. A stronger retail base also diversifies the liability mix away from bulk and short-term funds.
- Balance Sheet Strength: Maintaining double-digit growth in deposits and advances, even after adjusting for technical write-offs, demonstrates disciplined execution of business strategy.
Conclusion: A Positive Momentum in Q3 FY26
South Indian Bank’s Q3 FY26 update paints a picture of steady and strategic growth. Total deposits rising by 12.17% and CASA balances growing even faster suggest a solid improvement in funding quality.
Advances also expanded in double digits, laying a foundation for stronger interest income. While detailed asset quality metrics were not highlighted in the business update, broader industry trends show improving credit conditions. As the bank moves into future quarters, its emphasis on building reliable deposits and expanding credit is expected to continue shaping performance and investor confidence.
Frequently Asked Questions (FAQs)
South Indian Bank deposits rose due to strong retail inflows and better savings account growth, showing higher customer trust during the quarter ended December 31, 2025.
South Indian Bank’s CASA ratio stood at 31.84% as of December 31, 2025, supported by steady growth in current and savings account balances.
The update appears neutral to positive, as deposit and loan growth improved balance sheet strength, though investors await full earnings and asset quality details after December 2025.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
