Analysts estimate CSB loss at upwards of Rs100 cr

Madhavan Menon takes charge as part-time chairman

KOCHI: After displaying a semblance of a turnaround during the third quarter of the current year by posting a profit of Rs74 lakh, albeit meagre by any yardstick for a bank, the Thrissur-headquartered Catholic Syrian Bank (CSB) seems to be going back to square one.

The financial analysts strongly believe CSB will close the year 2018-19 also with a loss not less than Rs100 crore.

Meanwhile, the bank notified that Madhavan Menon has been appointed as part-time chairman of CSB with effect from April 22, 2019 (Monday). Menon had served as the chairman and managing director of Thomas Cook India, prior to the CSB’s new assignment.

The analysts who talked to businessbenchmark.news said they won’t be surprised even if the CSB loss goes to around Rs150 crore or more, as the bank may be required to provide for the pension liabilities arising out of the two-year early retirement scheme the bank has embraced for its officers from this April onwards.

“If that’s the case, this amount will be in addition to the regular pension liabilities the bank is required to shoulder during a normal year, and the number of additional pensioners the new move could render redundant for the bank will be about 100 during the financial year under review,” they added further.

The bank’s net loss for the current year’s nine-month period ending December 31, 2018 was pegged at Rs46.78 crore with the first two quarters having reported losses and the third quarter showing Rs74 lakh profit.

Should the year 2018-19 closes with a loss as forecast by analysts, the bank will have completed a five-year streak of loss-making periods with the exception of 2016-17 when the bank had posted a profit of just Rs1.55 crore, the authenticity of which has been challenged by many even from the inside.

The current year’s (18-19) results gain significance as this would be the first financial year of the bank after Fairfax India Holdings (FIH) has participated in the ownership of the bank, the process for which once completed will see the Canadian financial service group owns 51 per cent stake in the bank.

Fairfax had informed a few months back that it had completed an initial closing of the transaction and invested approximately $60 million in equity shares and warrants (exercisable for equity shares) of CSB resulting in an equity interest of 19.7 per cent. “The remaining consideration is payable within 18 months, upon which our ownership will go to 51 per cent on a fully diluted basis,” it said sometime in October last year.

With the help of the fresh capital, the capital adequacy of the bank has improved from a precarious 10.24 per cent to a comfortable 15.45 per cent as of December end, 2018. The asset base of the bank also witnessed a handsome growth of 11.73 per cent – from Rs15,870.05 crore to Rs17,737.14 crore

 

 

 

 

 

 

 

 

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