CSB posts 9m loss of Rs60cr; EGM on Mar 21

KOCHI: The Catholic Syrian Bank (CSB), which is in its countdown to a crucial extra general meeting (EGM) to be held on March 21, has reported yet another loss making period, posting a net loss of Rs59.65 crore for the nine month ending December 31, 2017 compared with a net profit of Rs27.28 crore for the same period last year.

Businessbenchmark.news had mentioned in one of its earlier reports that the bank would post a loss of not less than Rs45 crore for the nine month closed on December 31, 2017.

The bank has cashed in on the tax benefits of earlier periods to the extent of Rs31.57 crore and this has helped the bank mitigate the net loss substantially despite having posted a loss before tax of Rs91.21 crore.

The banking analysts businessbenchmark.news talked to raised serious concerns about the amount provided towards pension liabilities. The bank has stated in its notes that, “Pending actuarial valuation, an amount of Rs50.87 crore has been provided towards incremental liabilities in respect of pension and gratuity on an estimated basis for the 9 months ended December 31, 2017.”

The analysts are of the view that this would be much less than the actual provisions needed to cover pension and gratuity liabilities. The provision against non-performing assets (NPA) at Rs149.82 crore has been the villain this time too, as the amount was big enough to nullify all the positive effects of the bank’s performance and landing the bank once again in red.

While the gross NPA has come down from 8.8 per cent to 7.18 per cent, the net NPA also dropped from 6.18 per cent to 4.45 per cent as of December 31, 2017.

The EGM of shareholders is expected to take up the issues of increasing the authorized capital of the bank to Rs200 crore in order to issue 8.63 crore new shares to Fairfax at the rate of Rs140 per share (Rs10+Rs 130 as premium), thus  bringing to the bank an investment of Rs1,200 crore.

The new investment will make Fairfax the majority shareholder of the bank at 51 per cent but at a much lower voting rights. The bank EGM will also take for ratification raising the FDI investment limit from the present 49 per cent to 74 per cent.

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