The Kerala-based Catholic Syrian Bank
(CSB) has chalked out plans to get back on the path of consistent growth and sustainable success, powered by core income growth. The bank is focusing on capital augmentation after the Fairfax
deal didn't go through.
In 2016-17, the bank was able to report an operating profit of Rs 151.71 crore, as against an operating loss of Rs 3.75 crore in 2015-16, and reported a net profit of Rs 1.55 crore, as against a net loss of Rs 149.72 crore in 2015-16.
Chairman T S Anantharaman
said the bank's profitability was under stress mainly due to muted growth in the overall business and an increase in provisioning for non-performing assets
(NPA). However, according to him, the erosion in profitability has been arrested and contained.
Despite the challenges faced during the period, CSB
has remained adequately capitalised and fundamentally strong enough to absorb these adversities and has returned as a profit generating institution from continuously being in the red for the past two years.
There are, however, the challenges of improving the quality of assets, increasing the pace of business growth, effective risk management, particularly in the context of Basel-III norms, driving financial inclusion, and, above all, sustaining the key profitability parameters.
During the period under review, several steps had been initiated to recalibrate and consolidate the strength of the bank. As part of this, CSB
has specifically been focusing on all the delivery channels to maximise revenue.
"On the technology front, CSB
continues to adopt and implement new technologies to favourably leverage its position," said Anantharaman.
"We are confident that all our continued efforts will add significant value to various aspects of the business and help us render quality service to our customers and all other stakeholders," he added.
As part of the capital augmentation plan, the bank has mobilised Rs 111.04 crore this year through the issue of shares under the preferential offer route.
will be raising further capital, as may be required, for future growth through preferential or other permitted modes," said Anantharaman.
After the Fairfax
Rs 1,000-crore infusion didn't go through due to valuation difference, the bank is scouting for investors.
Managing Director and Chief Executive Officer C VR Rajendran said that 2016-17 has been a significant year for the bank since it could get back to profitability after two years of consecutive losses. The major performance highlights are that the CASA (current account, savings account) mix improved to 25 per cent from 20 per cent, with year-on-year (YoY) growth of 28 per cent; gold loans grew at 15 per cent YoY; the cost of deposits came down to 6.90 per cent from 7.86 per cent.
The cost-to-income ratio improved to 74.49 per cent from 100.87 per cent, while the capital adequacy ratio improved to 12.15 per cent from 10.55 per cent.
On the flip side, the stress on the corporate and SME book continued in financial year 2017 as well, taking the bank's gross NPA
to 7.25 per cent from 5.62 per cent and the net NPA
to 5.51 per cent from 4.40 per cent. The good news is that the worst seems to be over on NPA
CSB's 2016-17 results relied heavily on treasury profits, which was a one-off event.
"We have chalked out detailed plans to put the Bank on a path of consistent growth and sustainable success, powered by core income growth," said C V R Rajendran, Managing Director & CEO of the bank. He added that the lender is eyeing exponential growth in key focus areas such as gold loans, SME exposure and retail loans.
The bank's credit-deposit ratio, currently among the lowest in the industry, has pushed its net interest margin (NIM) to below two per cent. Acknowledging this fact, Rajendran said CSB needed to ramp up growth in the CASA segment, in order to bring down the cost of funds.
Rajendran asserted that the lender had learnt from past mistakes and had strengthened credit processes based in CRISIL recommendations. He claimed the bank would be setting up an NGFC-style two-wheeler finance vertical.