Net profit increase to Rs 61 crore in the quarter ended June 2021 from Rs 54 crore a year earlier. Loans grew 23% leading to a 45% growth in net interest income (NII) to Rs 268 crore.
Profit was higher despite a rise in provisions and a 55% fall in treasury income. NPA provsions rose seven times to Rs 104 crore from Rs 14 crore a year ago. It was also higher than the Rs 91crore reported in March 2021. Gross NPAs rose to 4.88% in June 2021 from 3.51% last year and 2.68% in March 2021 mainly as slippages from gold loans increased.
“It was a tough quarter as recovery of loans was impacted due to explicit instructions from the political system in some states including Kerala but we are confident that as things improve both demand for loans and recovery of will improve. Already we are seeing an increase in recovery and we continue to expect 20% to 25% growth in this fiscal year,” said CVR Rajendran, CEO at CSB Bank.
Gold loans are the largest part of the bank’s assets with 37.9% share and is a big contributor to its profits with a quaterly yield of 11.50%.
However, out of the Rs 435 crore of new NPAs during the quarter, Rs 361 crore was from gold loans including reversal of interest.
Rajendran however said that the bank has a handle on gold loans and it continues to be its mainstray in loans with slippages down to Rs 187 crore in June from a peak of Rs 274 crore in April.
“We have enough excess provisions to take care of any emerging stress. We have not touched the Rs 106 crore Covid related provision we did last fiscal and also have other excess provision totalling Rs 220 crore,” Rajendran said.
Kerala continues to be a key state for the bank, housing 51% of its branches, 63% of its deposits and 31% of its loans.
The bank will expand further away from southern India into the western part of the country this fiscal and has plans to add 200 branches to its 517 branches.
Head of retail, SME and technology Pralay Mondal said the bank is in talks with HDFC Ltd to sell home loans and could also launch a white label credit card with a fintech company even as it expects demand from agriculture, micro finance and two wheeler loans to bounce back due to the good monsoon.