CSB Bank hopes to double its credit growth annually for next three years

CSB bank expects the share of gold loans to come down significantly in future despite a buoyant gold portfolio. This is mainly owing to growth in the SME and retail segment

Kerala-based CSB Bank expects to double its credit growth on an annual basis for the next three financial years, from 9-10 per cent in 2021-22, a top bank executive told Business Standard. The lender is backed by Canadian billionaire Prem Watsa’s Fairfax Financial Holdings.

“Our growth is slightly less than 10 per cent this year.  We want to grow faster. For that we have to grow faster than the system.  We will double our credit growth on a CAGR basis in the coming three years,” said Pralay Mondal, managing director and chief executive officer (Interim), CSB Bank. He added that if the bank wants to grow, it will have to focus on segments other than gold loans too.

At present, gold loans contribute to around 39 per cent of the advance mix by CSB Bank, followed by loans to cent of small and medium-sized enterprises (14.7 per), corporate loans (24 per cent) and retail loans (6 per cent). “We will have to grow more on retail assets, SMEs and closer to the fifth year we will see growth in larger corporate segments.  Currently we focus on emerging corporates and mid-market in wholesale banking,” Mondal added. The bank expects the share of gold loans to come down significantly in future despite a growth in the gold portfolio. This is mainly owing to growth in the SME and retail segment.    

“Our expectation is that the SME mix should come to around 20 per cent from around 14 per cent now. Retail Assets without gold should start picking up soon.  Wholesale also has to grow faster than what we are growing today to retain the business mix they have in the bank now,” he said. During the fourth quarter CSB Bank has posted a two-fold rise in net profit during the fourth quarter of 2021-22 to Rs 131 crore, as compared to Rs 43 crore during the same period in 2020-21. The bank’s operating profit was up by 77 per cent during the quarter under review to Rs 142.05 crore as against Rs 80.38 crore during the January to March quarter of 2020-21.

Regarding the outlook for 2022-23, the bank stated that its expects growth on gold loan book to come back during the first quarter of the current fiscal, after not growing for around three quarters. “We expect our growth to happen from the first quarter itself on gold loan. We are doing a lot of work with the SME,. Retail we are building up the platforms,” Mondal said.

In terms of branch expansion, CSB Bank expects a 15-20 per cent rise every year. He added that the bank is targeting addition of another 100 branches during the current financial year. At present, the bank has around 603 branches. At present, around 44 per cent of its branches are based out of Kerala, followed by Tamil Nadu with 19 per cent and Maharashtra with 10 per cent.