CSB Bank’s Q2 net profit up 72% at Rs 119 cr, NIM improves to 5.22%

CSB Bank’s Q2 net profit up 72% at Rs 119 cr, NIM improves to 5.22%

Canadian billionaire Prem Watsa-controlled reported a 72% increase in net profit led by higher net interest income (NII), higher fee income, and also a write-back in provisions as slippages fell and recoveries improved.

Net profit increased to Rs 119 crore in the second quarter ended September 2021 from Rs 69 crore a year earlier led by a 21% increase in NII to Rs 278 crore mainly due to a fall in interest expenses as cost of deposits fell to 4.30% from 5.18% a year earlier. Net interest margin (NIM) or the difference between the yield paid on deposits and that earned on loans improved to 5.22% from 4.48% a year earlier.

Other income increased 39% to Rs 70 crore from Rs 51 crore a year earlier due to higher fees and commissions. A Rs 9 crore write back in provisions due to a drop in fresh slippages and a sharp increase in recoveries helped in expanding profits. Additions to NPAs fell sharply to Rs 205 crore from Rs 435 crore in the quarter ended June while recoveries increased five times to Rs 190 crore from Rs 36 crore in June 2021 allowing the bank to write back provisions, contributing to profits. Out of the total slippage, Rs 170 crore was from gold loans.

As a result of the higher recoveries gross NPA of the bank fell to 4.11% in September 2021 from 4.88% in June, though higher than the 3.04% reported in September 2020.

CEO C VR Rajendran said the bank made it a priority to keep a lid on emerging stress during the quarter which helped it keep NPAs under control. “We expect to recover all our Rs 287 crore of gold loan NPAs and take to it levels seen in March 2021 by the end of the current fiscal. Overall we expect between Rs 300 crore to Rs 400 crore in terms of recovery this fiscal,” Rajendran said.

The bank has maintained a Rs 106 crore provision to deal with the Covid 19 pandemic which is at the same level it was in June 2021.

Rajendran said the bank is seeing segments like micro and small enterprises and is expecting an improvement in results for the rest of the fiscal year.

“With the product and process improvements both implemented/proposed, we intend to capture a better share of the retail segment and grow both the retail liabilities and assets. So we look forward to improving our performance in both the topline and bottom-line parameters in the coming quarters as well,” Rajendran said.

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