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CSB Bank reported a 14 per cent year-on-year (yoy) increase in net profit at ₹61 crore in the first quarter ended June 30, 2021 even as it saw a rise in delinquencies in gold loans, which account for a major share of its credit portfolio.
The Thrissur-headquartered private sector bank had reported a net profit of ₹54 crore in the year-ago quarter.
CVR Rajendran, Managing Director and CEO said, “Covid second wave coupled with the LTV (loan to value) management of gold loans did pose some challenges in the first quarter of FY22.
“...We are confident of managing the NPAs as the challenges are mainly from the gold segment where recovery is only a matter of time.”
During the reporting quarter, fresh slippages rose by ₹435 crore (₹188 crore in the fourth quarter/Q4FY21), with gold loans alone accounting for 77 per cent of the slippages.
Loan loss provisions were higher at ₹104 crore in Q1FY22 against ₹14 crore in the year-ago period and ₹91 crore in Q4FY21.
Rajendran emphasised that stable gold market trends and the centralisation of recovery processes at the bank’s end will mitigate this adverse situation to a large extent.
NII and NPAs
Net Interest Income (the difference between interest earned and interest expended) rose 45 per cent y-o-y to ₹268 crore (₹185 crore in Q1FY21).
Total non-interest income, comprising fee-based income, trading income and other income, nudged up 3 per cent yoy to ₹76 crore (₹74 crore).
Gross NPA position deteriorated to 4.88 per cent of gross advances as at June-end 2021 against 2.68 per cent as at March-end 2021. Net NPAs position, too, showed a similar trend, increasing to 3.21 per cent of net advances against 1.17 per cent.
“Increase in GNPA level when compared to Q4 of FY21 is mainly because of increase in Gold NPAs and we are optimistic of recovering the same without much losses/haircuts,” the bank said in a statement.
Total advances increased 23 per cent y-o-y to ₹14,863 crore as at June-end 2021. Total deposits rose 14 per cent yoy to ₹18,653 crore.
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