Gold loan constitutes 44 pc of advances; accounts for 3/4th of loan growth
By CL Jose
KOCHI/October 21-2022: CSB Bank, another Thrissurian bank, where Prem Watsa-owned Fairfax Financial Holdings now holds the largest stake at about 50 per cent, has reported Rs120.54 crore net profit for the second quarter (Q2) ending September 30, 2022 representing 1.67 per cent growth compared with the same period in the earlier year.
The total advances of the bank in the said quarter grew by 24 per cent year on year, from Rs14,071.1 crore to Rs17,468.3 crore.
Total Deposits grew by 10.13 per cent year on year, whereas CASA ratio stood at 34.27 per cent as on September 30 against 32.58 per cent a year ago.
The bank turned in a total income of Rs600.12 crore for the quarter compared with Rs555.64 crore for the same quarter last year.
NPAs decline substantially
The period under review witnessed a substantial drop in NPAs compared with the previous period, and this has helped the bank prop up its bottom line.
While the gross NPA almost halved year on year from Rs586.83 crore to Rs291.04 crore, the ratio witnessed a contraction from 4.11 per cent to 1.65 per cent during the said period.
During the period, the net NPA plunged substantially from Rs370.06 crore to Rs98.86 crore representing a year-on-year decline from 2.63 per cent to 0.57 per cent in relation to the net loans.
PCR one of sector’s best
Provision coverage ratio (PCR) of CSB Bank has moved up to one of the best in the industry at 90.14 per cent as of September 30, 2022.
Capital to risk weighted assets ratio (CRAR) for CSB at 25.14 per cent is so healthy that the bank need not have to think of raising capital in the foreseeable future, according to analysts.
However, return on assets (RoA) declined marginally from 2.02 per cent to 1.87 per cent year on year.
The CEO and MD of CSB Bank, Pralay Mondal, said that the current macro-economic scenario is quite volatile and challenging, adding that this quarter (Q2) witnessed a repo hike of 100 bps from 4.90 per cent% to 5.90 per cent.
“The prudent treasury strategies helped us with minimal shocks. While our deposit growth was in line with the industry trend, we could outgrow in the advance portfolio. Despite having a negative impact of about Rs33 crore due to the lack of opportunities in the PSLC market, the boosting up of other income streams helped us to contain the reduction to a decent extent,” Mondal added.
Gold loan is the saviour
CSB owes a lot of its ‘good health’ to its gold loan portfolio of Rs8,036 crore, which accounts for 43.7 per cent of the bank’s loan book as of September end.
Gold loans that constituted only 36.2 per cent of the total loans a year ago surged by 47.18 per cent or by Rs2,576 crore during the past one year, during which period the total advances grew by only Rs3,398.2 crore.
This in simple terms means that the bank’s advances growth was driven by the gold loans, which contributed three-fourths of the growth in advances year on year.
