CSB Bank expects 20-22% growth in the current fiscal year despite slower growth in gold lending activity.
Over the next fiscal year, the bank expects 25% growth in both advances and liabilities, with its new team of civil servants becoming operational by April 2021, chief executive and CEO CVR Rajendran said.
“We are seeing good inquiries from SMEs and mid-sized businesses. Retail demand is also back. Demand is good in the food industry and automotive auxiliaries, ”he added.
Total advances increased 21.6% year-on-year (year-on-year) to 13,137.3 crore rupees in the third quarter, with the gold loan portfolio increasing nearly 60.7% year-on-year to 5,644 crores. Sequentially, the gold loan portfolio only increased by 14%.
“The gold lending declined in the third quarter. Gold prices have become volatile and have fallen as well. We have gradually reduced the LTV by 82%. Our average LTV for the current portfolio would be 70-75%, ”he added.
The Thrissur-based lender reported an 89% year-over-year increase in third-quarter net income to Rs 53.05 crore on rising interest and Treasury income.
Regarding the NIM, Rajendran said the 5.17% NIM cannot be maintained for long as there are pricing issues in most sectors. He added that the ideal NIM for the bank would be above 4% in the long run. “COVID has not had the impact we expected. We have built up a huge reserve for that. The provision coverage ratio is 91% and other than that there is standard provisioning, I don’t think it will take that much and we will slowly relax in the future, ”he said.
“Accounts that would have been classified as NPA without the Supreme Court embargo, excluding the restructured accounts, totaled Rs 195 crore. We maintain a 25% provision on these accounts. Out of Rs 195 crore, Rs 130 crore or 70% are gold loan accounts which we hope to recover without a hitch or glitch, ”he added.
Regarding the VRS scheme that the bank introduced last quarter, he said only 33 of the 223 eligible employees chose it.
He added that the bank has opened 60 branches in the current fiscal year out of the planned 100 branches.