CSB Bank Q1 profit jumps 27% YoY to Rs 150 crore as provisions decline
Sequentially, however, profit fell 26 percent—the bank had posted a PAT of Rs 202 crore in the March quarter. Management attributed the decline to seasonality, even as the stock fell nearly 7 percent to Rs 344 apiece on the BSE.
“Our business is seasonal—the first quarter is typically slow and the fourth quarter the strongest, aided by fee and PSLC income. As a result, quarter-on-quarter comparisons are less meaningful for us,” Pralay Monday, MD and CEO, CSB Bank told ET.
Net interest income grew 26 percent year-on-year to Rs 479 crore, compared to Rs 379 crore in the same period last year. Provisions fell 19 percent year-on-year to Rs 49 crore versus Rs 60 crore. Net interest margin (NIM) improved to 3.66 percent in the June quarter from 3.54 percent a year earlier, but was down sequentially from 3.83 percent in March.
Disbursements dipped 1 percent year-on-year to Rs 11,922 crore, compared to Rs 12,088 crore last year. Gold loans, however, grew 47 percent, with the total gold loan book at Rs 2,190 crore. Total advances grew 24 percent to Rs 40,867 crore.
“Gold loans were an outlier as last year’s rally in gold prices drove disbursements. This year, with prices largely stable, top-ups have been limited, while the rest of the business has followed normal seasonal trends,” Mondal said.
He also added that retail growth has been comparatively slow because the bank’s customer-facing franchise is still ramping up, since its technology infrastructure was only implemented last year.”Now the products, processes and everything are falling into place,” he said. “The journey really begins now for us on customer acquisition, CASA and retail. Frankly, CASA and retail are two sides of the same coin — if you don’t acquire customers and build CASA, you can’t grow retail assets either. Otherwise you have to go through DSAs, which I’d rather avoid.
Mondal also said the bank has been cautious on retail unsecured loans. Across the bank’s overall portfolio, only 2 percent is unsecured retail lending, and it does not have an unsecured SME business.
“We will grow unsecured lending only when our own existing customers take up those products,” Mondal said.
“Right now, we have three to four retail products doing well: commercial vehicles (CV), construction equipment (CE), healthcare, and some retail LAP (loan against property). We favour these because portfolio quality is better — these are income-generating assets for the customer, effectively functioning like pseudo-SME loans, since the borrower uses the loan to generate income.”
