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Home >Companies >Company Results >CSB Bank Q3 net up 88%, provisions also soar

Aided by a smaller base, south-based CSB Bank on Tuesday posted an 88% jump in December quarter net profit at 53 crore, but witnessed a jump in provisions for bad loans.

The Kerala-based private sector lender's core net interest income grew by 61.8% to 155.2 crore during the reporting quarter, while the treasury profits helped in non-interest income more than doubling to 116.6 crore. Its advances grew 22 per cent on the back of a 61 per cent rise in gold loans and the net interest margin expanded to 5.17% on lower cost of funds and widening yields on advances.

The bank income had been lower in the year-ago period due to a 75 crore impact on account of a migration to a new system of taxation. At the end of December, the bank's gross non-performing assets ratio stood at 1.77% as against 3.04% three months ago. If not for the Supreme Court standstill order, the GNPAs would have been 3.42%, the bank said.

Its managing director and chief executive C V R Rajendran told reporters that even though it has not recognized any fresh slippage during the reporting quarter, it has set aside money for all the prospective losses and the excess provisions now stands at 277 crore. The overall provisions shot up to 111 crore as against 27.61 crore in the year-ago period.

Rajendran said the bank is not worried about its gold loan exposure, which constitutes 40.2% of the overall advances, saying the loan to value ratio at a portfolio level is 75%. The proportion will go down as other assets grow faster, he said, maintaining that it will continue to loans against the precious metal.

The bank will continue to be conservative and cautious in its strategy going forward, he said, adding that it will be more open for lending to small businesses as the economy recovers. Its overall capital adequacy is at over 21% with the core tier-I at 19.77%, Rajendran said, adding that it will not be looking to raise funds for the next two years.

The bank on Tuesday announced a voluntary retirement scheme (VRS) for its select employees, for which 223 staffers are eligible, Rajendran said, adding that if all of them opt-in, it will have to make a payout of 80 crore which will be beneficial from a long term perspective. Going forward, its investments will be on the technology and the digital front and these employees earning up to 12 lakh per year may not be as effective in handling the new age banking requirements.

CSB Bank shares were trading 2.60% up at 237.20 apiece on the BSE at 1443 hrs as against 1.75% gains on the benchmark.

This story has been published from a wire agency feed without modifications to the text.

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