High CAR at 23pc ensures large headroom for growth
KOCHI: The Thrissur-based CSB Bank must have delighted its shareholders through its third quarter (Q3) financials, the first financial performance the bank has announced after its much-hyped IPO, by reporting a net profit of Rs28.14 crore for Q3 – a jump from the Rs74 lakh the bank posted as profit for the same period in the previous year.
The more encouraging aspect of this financials for the shareholders, especially those entered the shareholders’ list through the Rs410 crore IPO that raised Rs24 in fresh capital will be the substantial decline in the bank’s non-performing assets (NPA), thanks to the Rs205.6 crore NPA write-off the bank effected during the previous quarter.
While the gross NPA declined from Rs780.03 crore to Rs352.63 crore as of the end of December 2019, the net NPA contracted in size from Rs365.47 crore to Rs213.74 crore during the said period.
In percentage terms, while GNPA fell by more than half, from 7.52 per cent to 3.22 per cent, the year on year decrease in net NPA was from 3.67 per cent to 1.98 per cent.
Another aspect where CSB Bank scored over a majority of the banks in the country would be on the bank’s provision coverage ratio (PCR) that has staged a smart improvement to 80.3 per cent as on December 31, 2019 from 66.2 per cent a year ago and from 79.5 per cent as on September 30, 2019.
According to an analyst, the bank seems to have followed a definite plan more focusing on the bottom line. While the capital and reserves have grown from Rs1303.20 crore to Rs2020.30 crore during the last one year, a jump of more than55 per cent, the growth in deposits, total assets as well as advances was kept on check.
While the deposits grew year on year just three per cent from Rs14,863 crore to Rs15,241.1 crore, assets remained almost flat at Rs17,782 crore, whereas the advances were allowed to grow by 9 per cent from Rs9,959.4 crore to Rs10,808 crore during the period under review.
The most promising part of the balance sheet is that the capital adequacy ratio (CAR) of the bank as of December end, 2019 stayed at an impressive 23 per cent compared with 15.5 per cent a year ago, allowing the bank enough headroom for growth in the future.
The allocation of assets clearly shows that the bank is more bent on showing results (profit) and this is amply proved by the gold loan portfolio, which presently constitutes 32 per cent of the total advances, being the largest portfolio of the bank.
The net interest margin is way above that of many other banks at 3.4 per cent. As of December end, the shareholding of promoter and promoter group is 49.73 per cent, whereas the public holds 47.39 per cent, again the largest among the Kerala based banks.