CSB Bank Q2 profit jumps nearly 3-fold, slippages fall significantly

Kerala-headquartered private sector lender CSB Bank, formerly Catholic Syrian Bank, has reported a strong set of numbers for the September quarter 2020, with profit rising nearly three-fold YoY despite higher provisions.

The bank's profit for the quarter stood at Rs 68.9 crore, increasing 178.9 percent compared to Rs 24.7 crore in the year-ago period driven by net interest income (NII), non-interest income and PPoP.

NII grew by 56 percent to Rs 229.25 crore YoY, with net interest margin (NIM) expansion of 81 bps YoY at 4.5 percent.

"The improvements in quarterly ratios that supported higher NIM in Q2FY21 vis a vis Q2FY20 are yield on advances which increased from 10.33 percent to 10.94 percent, cost of deposits fell from 5.91 percent to 5.18 percent and the yield on investments rose from 6.52 percent to 6.74 percent YoY," CSB Bank said in its BSE filing.

Advances (net) in Q2FY21 grew YoY at 11 percent, with gold-loan growth at 47 percent YoY, while total deposits grew by 13 percent YoY.

"Now we are well entrenched on the growth track and have recorded a growth of over 10 percent in both deposit and advances. We could post improvement in all key metrics: NIM, Cost Income Ratio, RoA, RoE, Gross NPA, Net NPA, PCR, CRAR. We have now set our own benchmarks to be exceeded next quarter," C VR Rajendran, Managing Director & CEO said.

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Asset quality improved with gross non-performing assets (NPA) as a percentage of gross advances falling 47 bps sequentially to 3.04 percent, while net NPA fell 44 bps QoQ to 1.30 percent in the September quarter.

Slippages at Rs 3.7 crore in Q2FY21 declined sharply compared to Rs 5.5 crore in the previous quarter and Rs 60.7 crore in the year-ago period.

Provisions and contingencies increased significantly to Rs 80.72 crore in the quarter, up 40.3 percent QoQ and 228.5 percent YoY.

The provision coverage ratio improved to 84.24 percent as of September 2020 from 81.7 percent in the June quarter.

Non-interest income in Q2FY21 shot up 80 percent to Rs 97.6 crore in the second quarter, with the backing of increased treasury profits, processing fee and PSLC income, the bank said, adding operating profit surged 172.6 percent YoY to Rs 172.8 crore in Q2FY21.