CVR Rajendran, managing director & chief executive officer of CSB Bank, said growth in FY22 was elusive due to the prevailing conditions and cautious approach.

CSB Bank estimates that its advances will grow 20-25% in the next fiscal year, with SME and retail demand seen as good. In its current fiscal year, the Thrissur-based lender said it will only grow in single digits due to premature closings and takeover of loans by competitors.

CVR Rajendran, managing director & chief executive officer of CSB Bank, said growth in FY22 was elusive due to the prevailing conditions and cautious approach.

“There hasn’t been much growth in the current year as SME and wholesale banking stagnated. Private loans have shown no growth. Due to excess liquidity in the market, there is cheaper competition. In wholesale banking, there were a lot of early closings and in SMEs, takeovers by bigger banks at lower rates,” he said.

Rajendran said credit has picked up and gold bonds have started to grow from August. The gold loan portfolio is 36-38% of total advances and will continue to grow and remain a focus.

“The retail trade is now doing well and SMEs, especially from the manufacturing industry, are also showing growth. Advances are likely to grow by 20-25%. Only the two-wheeler loan portfolio looks muted,” he said.

CSB reported a 180% year-over-year increase in net profit in the third quarter to 148.25 crore over 53.05 crore in the third quarter of FY21. The net profit was Rs 118.57 crore in the previous quarter of the current fiscal year.

The quality of the lender’s assets has improved from the previous quarter, with reported gross non-performing assets (NPA) as a percentage of gross advances at 2.62% for the third quarter of FY22, from 4.11% in the previous quarter and 1.77% in the year ago period. Net NPA as a percentage of gross advances was 1.36%, up from 2.63% in the previous quarter and 0.68% in the third quarter of FY21.

Provisions were reversed for the quarter reviewed, with recoveries and upgrades exceeding slippages.

Slippages are well below our recoveries, even in gold NPAs. Our accelerated provisioning allowed us to have many recoveries on accounts written off and accounts issued. According to the new policy, this has been deducted from the provisions. Our cost of credit will be negative for the current year and will remain negative for the next two years,” Rajendran said.

Giving gold loan customers breathing space to repay loans during the pandemic has benefited both the customers and the bank, he said. “As the Covid-19 situation improved, the revenues of the customers also improved, allowing them to repay the loan and get back the jewelry that had sentimental value,” he said.

Speaking of his tenure, Rajendran, who will retire on March 31, said the bank was classified as an ailing bank when he took over, and in less than five years, CSB won the best bank award in the small banks category.

“In the past five years we have completely cleaned up the balance sheet. Our NPA ratios are among the best in the industry. Our provision coverage ratio is over 90% and the solvency ratio is also high. Our return on equity and return on assets are also above the industry average. We don’t need capital for the next two years and if all the profits are plowed back, we may not need capital for many years to come. The bank can stand on its own feet without raising further capital,” he said.

This post CSB Bank’s advances are likely to grow 20-25% next fiscal year

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