Tamilnad Mercantile Bank Ltd. (TMB) delivered a stellar performance in Q4 FY25, reflecting a significant improvement in profitability, operational efficiency, and asset quality. The bank's net profit rose by 15.4 percent year-on-year to ₹291.2 crore, compared to ₹253.1 crore in the same quarter last year.

Full-Year Profit Reaches Record High

For the full financial year, TMB’s net profit surged 10.3 percent to ₹1,182.6 crore, up from ₹1,072.0 crore in FY24. This marks the highest-ever annual profit for the bank, underscoring the effectiveness of its strategy and execution across segments.

Income and Margin Growth Drives Profitability

The bank reported an 8.8 percent increase in total income for Q4, which stood at ₹1,542.1 crore. The key contributor to this growth was a 22.3 percent jump in non-interest income, which rose to ₹200.4 crore. Meanwhile, interest income grew by 7 percent to ₹1,341.7 crore.

TMB maintained a healthy net interest margin (NIM) of 3.87 percent in Q4, while the average NIM for FY25 stood at 3.96 percent, reflecting a strong core lending business.

Strong Operating Profit and Cost Control

Operating profit during the fourth quarter stood at ₹404 crore, a growth of 10.1 percent year-on-year. This was supported by flat operating expenses, which remained at ₹364.3 crore. Interestingly, employee costs fell by 6 percent, despite the bank’s investments in digital transformation initiatives.

For the full year, operating profit rose by 17.8 percent to ₹1,745.7 crore, pointing to strong cost discipline and increased revenue efficiency.

Improving Asset Quality and Robust Capital Position

Asset quality saw remarkable improvement. The gross NPA declined to 0.36 percent, compared to 0.85 percent a year earlier. The combined stressed assets ratio (SMA + NPA) fell by 161 basis points year-on-year to 3.80 percent of advances.

Capital adequacy remains strong, with a CRAR of 32.71 percent, up 334 basis points YoY. The Common Equity Tier-1 (CET1) stood at 26.26 percent, providing a solid capital buffer.

Business Growth Led by Retail and MSME Focus

TMB’s total business reached ₹98,055 crore as of March 31, 2025, a 9.6 percent year-on-year growth. Advances rose by 11.0 percent to ₹44,366 crore, and retail-agri-MSME (RAM) loans accounted for 93 percent of the advances portfolio—showing a strong focus on core priority sectors.

Deposits increased by 8.4 percent to ₹53,689 crore, with the CASA (Current Account Savings Account) ratio at 26.44 percent, and a credit-deposit ratio of 82.64 percent.

Strategic Initiatives in Digital and Retail Segments

Management highlighted multiple initiatives aimed at strengthening both retail and corporate segments. These include:

• Transaction Banking Group for better service offerings to corporates

• Global NRI Centre to cater to Non-Resident Indian clientele

• Launch of the DEH (Digital Experience Hub) for enhanced internet banking experience

The bank also piloted a Credit Management Centre in Thoothukudi, which is expected to be scaled to 12 regions by Q1 FY26. This will digitally support loan disbursement and collections, aligning with the bank’s broader digital push.

Conclusion

Tamilnad Mercantile Bank’s Q4 and FY25 performance reflects not just numerical growth, but also a strategic evolution towards a digitally-enabled, retail-focused banking institution. With strong profitability, healthy margins, improved asset quality, and innovative banking platforms, TMB has firmly positioned itself for sustained growth.

This performance highlights TMB's ability to combine traditional banking strengths with new-age digital infrastructure, a crucial step in maintaining relevance and competitiveness in India’s rapidly evolving financial ecosystem.

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