Release Date: October 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CSB Bank Ltd (BOM:542867, Financial) reported a net profit of INR 138 crores, marking a 22% increase quarter-on-quarter and a 4% increase year-on-year.
- The bank's Net Interest Margin (NIM) remained stable at 4.3% despite rising costs of funds.
- Deposits grew by 25% year-on-year, significantly outpacing the industry growth rate of around 12%.
- The gold loan portfolio registered a robust growth of 28% year-on-year.
- The bank's capital adequacy ratio (CAR) is strong at 22.74%, with Tier 1 capital at 21.37%.
Negative Points
- The cost of funds remains elevated, putting pressure on the bank's margins.
- The CASA ratio is relatively low at just above 24%, indicating a reliance on term deposits.
- The bank's NIM is impacted by regulatory guidance on penal interest, reducing it by approximately 25 basis points.
- Retail inflation in India remains volatile, and industrial output was marginally negative, posing economic challenges.
- The bank's cost-to-income ratio is high, with a target to reduce it below 50% by 2030, indicating current inefficiencies.
Q & A Highlights
Q: Can you explain the discrepancy in the retail book growth figures?
A: The retail book includes the LAP portfolio, which was previously part of the gold loan book. This reclassification accounts for the difference in growth figures. - Pralay Mondal, CEO
Q: What is the outlook for margins given the current trends?
A: Margins are expected to be between 4.3% to 4.5% due to the impact of penal interest. We anticipate improvement in NIM from Q4 onwards as interest rates stabilize. - Pralay Mondal, CEO
Q: How do you see the ROA guidance evolving with the revised margin outlook?
A: Despite the margin impact, we aim to maintain ROA guidance between 1.5% to 1.8% by leveraging other income and managing costs effectively. - Pralay Mondal, CEO
Q: Can you provide insights into the corporate slippages and recovery prospects?
A: Slippages are trending downwards, and we expect to maintain GNPA below 2% and NNPA below 1%. We are working towards recovering some of the slippages. - Pralay Mondal, CEO
Q: What is the strategy for improving the CASA ratio and deposit franchise?
A: We are focusing on building a CASA franchise through customer acquisition and technology investments, aiming for significant improvements by FY26-FY27. - Pralay Mondal, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
