Tamilnad Mercantile Bank (TMB) reported its highest-ever quarterly net profit of ₹305 crore for Q1 FY26, marking a 6.27% year-over-year increase and signaling strong momentum for the regional banking sector.
The Thoothukudi-headquartered lender, which completed 103 years of operations, demonstrated improved asset quality metrics that outpaced industry benchmarks. Gross non-performing assets fell to 1.22% from 1.44% a year ago, while net NPAs dropped significantly to 0.33% from 0.65%.
“We’ve achieved our highest quarterly performance driven by core business growth,” said Salee S Nair, Managing Director and CEO, during Friday’s results announcement. The bank’s provision coverage ratio strengthened to 94.32% from 90.27%, indicating robust risk management practices.
TMB crossed the ₹1 lakh crore business milestone, with overall growth reaching 9.86%. The achievement comes as regional banks capitalize on expanding credit demand in tier-2 and tier-3 markets across India.
Asset quality improvements were particularly notable, with Special Mention Account ratios declining 193 basis points to 3.05% of gross advances. The bank’s Capital Adequacy Ratio surged to 31.55% from 29.21%, well above regulatory requirements and providing substantial growth headroom.
Book value per share increased to ₹589.09 from ₹520.63, reflecting strengthened balance sheet fundamentals. The metrics suggest TMB is well-positioned for expansion in India’s competitive banking landscape.
The bank operates 585 branches across 17 states and four union territories, serving over 5.3 million customers. Management added seven new branches during the quarter, focusing on strategic market expansion.
TMB’s performance stands out in the old private sector banking segment, where institutions face pressure from larger competitors and fintech disruption. The bank’s digital transformation initiatives and strategic partnerships aim to enhance operational efficiency and customer acquisition.
Regional banks like TMB have benefited from India’s economic recovery and increased credit penetration in smaller cities. The sector has seen improved loan growth and asset quality as economic conditions normalize post-pandemic.
With a conservative approach to lending and strong capitalization, TMB appears positioned for sustained growth. The bank’s focus on responsible lending practices and risk management has yielded consistent profitability throughout its operational history.
