CSB Bank comes of age; earns record high quarterly profit at Rs54 cr

Gold loan largest portfolio taking up 32 pc of advances

KOCHI: The Thrissur-based CSB Bank has reported a record high net profit of Rs53.6 crore for the first quarter of the financial year 2020-2021 (FY21) taking the return on assets (RoA) above one per cent (annualised).

The CSB Bank share closed on NSE at Rs225.05, and has gained about 25 per cent during the past one month alone.

The Q1 net profit represents 174 per cent growth over the net profit at Rs19.5 crore the bank posted for the same period last year. While the total income for the said quarter was Rs496.88 crore compared with Rs385.64 crore for the same period last year, the operating profit for the quarter under review was at Rs129.09 crore against Rs40.11 crore for the corresponding quarter in the earlier year.

Treasury a big contributor

With the interest rate ruling at one of the lowest levels in the recent history, CSB Bank, like most banks, could generate a handsome treasury income at Rs56.05 crore (before tax), though the retail operations of the bank made the biggest contribution to the bottom line of the bank this time, with a profit before tax of Rs59.08 crore.

The bank earned net interest income (NII) of Rs 185.3 crore as against Rs132.5 crore a year earlier, with an absolute growth of Rs52.80 crore or 40 per cent year-on-year and 18 per cent quarter-on-quarter.

The yield on advances improved to 10.74 per cent from 10.22 per cent a year ago. The gold loan, which is the largest portfolio with the bank, at 31.8 per or Rs3849 crore, may have helped improve the yield.

Asset Quality

The gross NPA decreased from Rs409 crore as on March 31, 2020 to Rs 401 crore as on June 30, 2020, whereas the gross NPA was at Rs513 a year earlier.

Gross NPA as percentage of advances has fallen to 3.51 per cent from 4.71 per cent a year before. At the same time, the net NPA decreased from Rs217 crore as on March 31, 2020 to Rs195 crore as on June end, 2020 a contraction by 10 per cent. Net NPA as percentage of advances decreased from 2.04 per cent a year ago to 1.91 per cent as of June end, this year.

The bank has achieved a provision coverage ratio (PCR) of 81.7 per cent, which is indeed much above the industry average. C VR Rajendran (seen in the picture), managing director & CEO of the bank, said that the results of the first quarter of FY21 underlines the fact that the bank is now well entrenched in the earnings growth path despite the testing times.

“We have used to the maximum advantage the TLTRO window provided by RBI and the results are evident in the improved net interest margin (NIM), which has crossed 4 per cent. Going forward, the key focus this fiscal will be to grow the gold loan book taking advantage of the relaxations made in loan-to-value (LTV) by RBI while remaining ever vigilant of gold price volatility,” the MD exuded confidence.


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