CSB Bank conducted a conference call 26 April 2024 to discuss its financial results for the quarter ended March 2024. Pralay Mondal, MD and CEO of the Bank addressed the call:

Highlights:

The performance of the bank was stable with the steady profitability in Q4 and full year FY2024.

The provisioning buffer stands at Rs 171 crore including Rs 105 crore of contingency provisions.

The bank has maintained the interest margin above 5% in the challenging conditions.

The RoA stood at 1.8% in FY24.

The deposits of the bank have increased by 21% with Casa ratio at 27.2% end March 2024.

Advances move up 18% end March 2024.

The yield on advances have improved by 60 bps over a quarter ago to 11.77% in Q4FY24.

The asset quality of the bank has little moderated in Q4FY2024, but still remained the best in the industry with net NPA ratio of 0.51% end March 2024.

The provision coverage ratio including technically written off accounts is at strong level of 86.44% end March 2024.

The capital adequacy ratio of the bank is strong at 24.47% end March 2024.

The bank added 76 branches in FY2024, while it is also focusing on investment into omni channel distribution. The bank is planning to add 60 to 65 branches in FY2025.

The bank is in the process of complete technology transformation and various initiatives are on track of implementation.

The bank has a four business vertical – wholesale, retail, SME and gold and all of them are headed by the experienced leaders.

The fresh slippages of loans increased in the quarter ended at March 2024 as one account with the exposure of Rs 70 crore was classified as NPA on technical reason contributing to the rise in overall slippages. The bank expects this account to be resolved in current year. The bank has created Rs 17 to 18 crore of provisions on this account as it create provisions for new NPAs at the rate of 25%.

There is a some slow down in the loan growth in certain segment due to RBI cautions.

The bank continue to aim to grow at 30 to 50% faster than the industry.

The opex to asset ratio is high due to investment into tech, distribution and teams. The bank expects to get ready with the technology and distribution in 18 months.

The technology expenses are expected to tapper down beyond FY2026 and the bank expects to reduce cost to Income ratio below 50% by FY2030.

As per the bank, it would not compromise growth for margins.

The margin can be expected in the range of 4.5 to 5%.

Deposit rate repricing is almost done and the bank expect to cost of deposits to rise by another 10 to 12 bps. The bank has maintained cost of deposit below 6%.