CSB Bank Q3 Net Up 88%, Provisions Also Soar

Aided by a smaller base, south-based CSB Bank on Tuesday posted an 88 per cent jump in December quarter net profit at Rs 53 crore, but witnessed a jump in provisions for bad loans.

The Kerala-based private sector lender’s core net interest income grew by 61.8 per cent to Rs 155.2 crore during the reporting quarter, while the treasury profits helped in non-interest income more than doubling to Rs 116.6 crore.

Its advances grew 22 per cent on the back of a 61 per cent rise in gold loans and the net interest margin expanded to 5.17 per cent on lower cost of funds and widening yields on advances.

The bank income had been lower in the year-ago period due to a Rs 75 crore impact on account of a migration to a new system of taxation.

At the end of December, the bank’s gross non-performing assets ratio stood at 1.77 per cent as against 3.04 per cent three months ago. If not for the Supreme Court standstill order, the GNPAs would have been 3.42 per cent, the bank said.

Its managing director and chief executive C V R Rajendran told reporters that even though it has not recognized any fresh slippage during the reporting quarter, it has set aside money for all the prospective losses and the excess provisions now stands at Rs 277 crore.

The overall provisions shot up to Rs 111 crore as against Rs 27.61 crore in the year-ago period.

Rajendran said the bank is not worried about its gold loan exposure, which constitutes 40.2 per cent of the overall advances, saying the loan to value ratio at a portfolio level is 75 per cent. The proportion will go down as other assets grow faster, he said, maintaining that it will continue to loans against the precious metal.

The bank will continue to be conservative and cautious in its strategy going forward, he said, adding that it will be more open for lending to small businesses as the economy recovers.

Its overall capital adequacy is at over 21 per cent with the core tier-I at 19.77 per cent, Rajendran said, adding that it will not be looking to raise funds for the next two years.

The bank on Tuesday announced a voluntary retirement scheme (VRS) for its seclect employees, for which 223 staffers are eligible, Rajendran said, adding that if all of them opt-in, it will have to make a payout of Rs 80 crore which will be beneficial from a long term perspective.

Going forward, its investments will be on the technology and the digital front and these employees earning up to Rs 12 lakh per year may not be as effective in handling the new age banking requirements.

CSB Bank shares were trading 2.60 per cent up at Rs 237.20 apiece on the BSE at 1443 hrs as against 1.75 per cent gains on the benchmark.


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