CSB Bank reports sterling Q3 profit at Rs148 cr on provision write-back

By CL Jose

KOCHI/January 24-2022: A provision write-back to the tune of Rs50.58 crore during the quarter ending December 31, 2021, has handed out CSB Bank a bonanza this time.

The bank, the second largest lender in the state in terms of market capitalisation (not on total assets) has reported a record net profit of Rs148.25 crore for the third quarter (Q3) ended December 31, 2021 (Q3-FY22), helping the bank log an year-on-year growth of 179.5 per cent and a sequential increase of 25 per cent in its quarterly net profit.

Net profit for 9 months reached Rs328 crore compared with Rs176 crore a year ago.

The conservative provisioning policy followed by CSB Bank had helped the bank in the second quarter (Q2) also with a write-back of Rs9.07 crore even as the bank had to set aside a huge provision of Rs126.29 crore for the third quarter a year ago.

There is a view that the incumbent CEO & MD of the bank, who is all set to take an early retirement in March this year, has given the much-needed shock treatment to the bank that had been languishing in inertia for years, rolling out losses quarter after quarter.

On the Q3 performance, C VR Rajendran (seen in the picture), Managing Director & CEO said, “Q3 FY 22 was really a ‘big’ quarter in terms of recovery. Though we had some challenges related to portfolio stress at the beginning, mainly in gold, due to the reversal of loan to value (LTV) regime as mandated by the RBI, the regulators, our focused and systematic approach yielded the desired results.”

CSB Bank has been moving ahead with the ‘blinders on’ with the sole target of bringing the bank back to ‘black’. The gold loan has played a pivotal role in its new journey towards profitability.

Today, almost 40 per cent of CSB’s loan portfolio is made up of gold loan as against the total advances of Rs14,637 crore.

In fact, other banks in the state such as Federal Bank and South Indian Bank (SIB), have also boosted their gold loan portfolio in the past two years in pursuit of a healthy bottom line.

While CSB’s  total advances witnessed a growth of 11 per cent year-on-year, deposits grew by 7 per cent year on year to Rs19,056 crore as of December 31, 2021.

Total assets grew 10.29 per cent from Rs21,497.1 crore to Rs23,710.2 crore during the quarter under review. With a very comfortable capital adequacy ratio (CAR) of 20.74 per cent (CRAR), the bank is well placed to take on a healthy growth in its assets base in the coming quarters.

All said, the gross NPA ratio has inched up to 2.62 per cent from 1.77 per cent a year ago. Likewise, the net NPA ratio too grew to 1.36 per cent compared with 0.66 per cent a year ago.

However, sequentially, the NPA ratios have improved from 4.11 per cent and 2.63 per cent respectively from the levels in the previous quarter.

Retail is saviour for CSB, too

For CSB Bank too, corporate/wholesale banking is not a supporting factor, and has contributed to the bottom line a loss (before tax) of Rs50.33 crore, which was by far compensated by its retail book, bolstered by its gold loans, to the extent of Rs231.47 crore profit (before tax).

The bank that is 49.723 per cent owned by FIH Mauritius Investments Ltd (FIHM), has generated a return on equity (RoE) of 27.02 per cent, which is a very good measure by any standards.

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