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earnings | IST

CBS Bank Q2FY22: Slippages down; expects gold loan growth to pick up

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Slippages remained at elevated levels even as the bank posted weak operating profits this quarter. CNBC-TV18 spoke to CVR Rajendran, MD & CEO of CSB Bank, to discuss the numbers.

CSB Bank on Monday reported a 72 percent jump in net profit at Rs 118.57 crore in the second quarter ending September. The Kerala-based private sector lender had reported a net profit of Rs 68.90 crore in the corresponding quarter of the previous fiscal.
Total income during the July-September quarter in FY22 rose to Rs 555.64 crore, as compared to Rs 513.77 crore in the year-ago quarter, CSB Bank said in a regulatory filing. On the asset front, the bank's non-performing assets (NPAs) rose to 4.11 percent of the gross advances as of September 2021, as against 3.04 percent a year-ago period.
In absolute terms, gross non-performing assets (NPAs) stood at Rs 586.83 crore, higher than Rs 387.42 crore reported in the same quarter a year ago. Net NPAs or bad loans stood at 2.63 percent (Rs 370 crore) as against 1.30 percent (Rs 163.52 crore).
On slippages, CVR Rajendran, MD & CEO of the company, said, “Slippages have come down substantially compared to the first quarter, most of the slippages in the first quarter were only gold loans and current slippages are very low. The gold loan is showing about Rs 280 crore of the slippage as on date, which can be recovered within the next two quarters.”
He added, “As far as the slippages in other loans are concerned it is much less than that the recovery which we have done. So as a result there is a writeback of provision, which we have made for other than gold loans. So, slippage going forward, will come down substantially and there will be more and more writebacks happening in the future quarters.”
On loan growth, Rejendran said, “The focus was more on the recovery because of the last year during a higher loan to asset value the portfolio has grown faster. This year we have brought down the loan to asset value substantially. The NBFCs and others are getting lower loan to asset value, people naturally shift for those who are looking for more money with the same jewellery get shifted to the NBFCs or private money lenders. So, naturally the portfolio has gone down. Apart from that the focus is only on the recoveries not on the lending.”
“From the current quarter onwards you will see traction in the gold loan and gold loan growth will be resuming to the same level, which it used to be earlier. Expect about 10-15 percent growth in gold loan book.”
On COVID situation in Kerala, Rejendran said Kerala has completely opened up, the activities are resumed to the normal level and there is no issue. The court functioning is yet to resume in full swing and the priority is giving to the larger cases. So, there is some delay in the recovery process.”
For full management commentary, watch the video.
-With PTI inputs