Fairfax-backed CSB Bank reported a profit of Rs 53.05 crore during the quarter ended December 31, 2020 as compared to Rs 28.14 crore during the same period last year, an increase of 89% over Q3FY20.
The total income of the bank during the period rose to Rs 599.24 crore from Rs 439.29 crore.
Total deposits grew by 16% YoY and the CASA ratio stood at 30.4% as on December31, 2020 as against 28.6% as on December 31, 2019. Advances (net) grew 22% YoY on the back of a 61% growth in gold loans.
C VR Rajendran, managing director & CEO of the bank, said, “The recent revival of economic activity is having a positive impact on the banking industry as a whole, and I am happy that we are no exception”.
In the context of the withdrawal of moratorium benefits by the regulator, the bank has decided to be prudent by holding provisions in excess of the regulatory provisions on the stressed assets.
“Apart from the growth in core Net Interest Income (NII), improved trading income/ provision reversals at treasury, backed by the favourable yield movements, net income by way of PSLC sale etc supported us on the income side,” said Rajendran.
The key ratios – NIM, cost income ratio, RoA, RoE, gross NPA, net NPA, PCR and CRAR continued to be strong. On the topline front, bank’s deposits and advances could register a YOY growth of 16% and 22%, respectively.
The new retail vertical with a complete product suite and revamped policies will be established in the near future. The new SME leadership is also working on volume growth by way of improved sourcing strategy, leveraging of the branch network and customized product delivery. “We look forward to building a sustainable business model by focusing more on these two segments apart from the gold loan portfolio,” said Rajendran.
“We will also have a focus on building a retail deposit base during the current quarter. While building volumes it will be our endeavor to have the right risk return matrix without compromising on the compliance standards,” he said.
NII in Q3FY21 stood at Rs 251.2 crore as against Rs 155.2 crore in Q3FY20 with an absolute growth of Rs 96 crore or 61.8 % .
On a QoQ basis, NII rose 9.6%. The improvements in quarterly ratios that supported higher NIM in Q3FY21 vis a vis Q3FY 20 are – yield on advances – up from 10.72% to 10.98% (10.94% -Q2FY21)), cost of deposits – down from 5.91% to 4.91% (5.18% – Q2FY 21), NIM – up from 3.92% to 5.17% (4.50% – Q2FY 21), yield on investments – up from 6.33% to 7.00% (6.74% – Q2FY21).
The bank’s net NPA dropped to 0.68 per cent during the quarter from 1.98 per cent, while gross NPA dropped to 1.77 per cent from 3.22 per cent.
The lender’s GNPA stood at Rs 234.89 crore during the end of December 2020 as compared to Rs 352.63 crore in the year ago period, while the net NPA dropped to Rs 89.52 crore from Rs 213.74 crore in the corresponding period last year.
Provision Coverage improves to 91 per cent as on December 31, 2020 from 84.2% as on September 30, 2020 and 80 per cent as on March 31, 2020. Additionally the Bank is holding a provision of Rs 154 crore for the stressed assets including SMA, blocked accounts etc.
While the capital adequacy ratio improved from 19.69 per cent as on September 2020 to 21.02 per cent as on December 31, 2020, leverage ratio stood at 7.7% as on December 31, 2020.
The bank’s board has approved the roll out of voluntary retirement scheme for award staff – CSB Bank –VRS for Award staff -2021’ – for the eligible staff members of the bank who have completed 50 years of age and have a minimum of 10 years of service with the bank.The scheme shall be effective from January 25, 2021, for such period, as specified in the Scheme. The status of the implementation of the aforesaid scheme and the financial impact thereof will be ascertained and communicated in due course. The implementation of the scheme will be beneficial to the bank in the long run, both in terms of financial and customer service point of view.