CSB Bank reported the highest-ever net profit of Rs 218.40 crore for the FY21 and a net profit of Rs 42.9 crore in the fourth quarter. CVR Rajendran, managing director & chief executive officer of CSB Bank, tells Rajesh Ravi about the bank’s functionality and outlook. Excerpts:
What is your outlook for the existing fiscal offered that you grew by 24% in the last fiscal and the second wave of the pandemic is seen as sturdy?
No guidance offered that the circumstance is extremely unpredictable at this point of time. Our preferred development is 25% for the year. Our balance sheet is nonetheless extremely modest and development will not be a dilemma. First quarter will be extremely mild and then the Indian economy will come back with a vengeance. I have seen that take place. We will have substantially more possibilities when the economy is opened up.
From which sector do you see development coming? Your gold loan has grown 61.3% year-on-year (y-o-y), but sequentially it has slowed down.
Gold loan will continue to be focus location for some more years. We are nonetheless a marginal player and my outlets are growing. More business enterprise would be achievable with more distribution points. We are also focusing on SME and retail banking.
How is demand for credit, specifically gold loans ?
At present, the demand is damaging mostly simply because of gold loan. We have brought down the loan-to-worth (LTV) from March 2021 and are focusing on collections of loans offered on a higher LTV. This will bring down the gold loan portfolio of all players. But then once more, in this industry gold loan is the only accessible solution. Personal loan is not encouraged and unsecured loans are not there in the industry. So, we are moving to the next segment, which is exactly where individuals who earlier under no circumstances took a gold loan accept it. Today my typical ticket size is Rs 1-1.25 lakh and now we will move to an typical ticket size of Rs 3 lakh.
What is your typical LTV now and how substantially gold is beneath your custody?
Average LTV has come down to 68% and it was 83% at the peak. Gold loan portfolio has grown by 61.3% y-o-y to touch Rs 6,131 crore and the bank has 17.28 tonne of gold in its custody.
Are you worried about NRI remittance slowing down with individuals returning back from the Middle East?
My industry share of NRI deposit is extremely low. Even even though it is 24% of my total deposits, CSB has hardly 3% share of the total remittance coming to Kerala. CSB Bank can nonetheless develop in the industry simply because of our modest share. We are working difficult to improve our industry share.
What about slippages in the coming Q1 of the fiscal ?
Gold loan slippages are more, and I am seeing such slippages in the gold loan segment for the very first time. Gold loan caters to the decrease segment. Corporates are carrying out properly but the every day wage earners are carrying out badly. We are going slow on collections in the gold loans, but beyond a specific level we can’t do something. But, our March NPA is decrease than December NPA. Corporate loans are carrying out properly. SME is carrying out alright in selective sectors, it is only modest ticket loans that are carrying out negative. In April 2021, my collection is 93-94%, but that should really not be an indicator. We will have to wait additional to know the effect. Definitely, there will be an effect.
CSB is preparing 200 new branches. What about new items like credit cards?
In Kerala, we will open in the northern side, exactly where we do not have substantially presence. We will open more branches in Tamil Nadu, Karnataka, Goa, Andhra Pradesh and Gujarat. Our higher focus location will be southern states and the West.
We are also preparing to introduce credit cards in tie-up with larger banks. We are also modest to introduce our personal credit card. So, we are speaking with a major public sector bank and a private bank to introduce co-branded cards.