CSB Bank turns around with Rs 134 cr PBT in FY20 after years of losses

Despite a one-time hit of Rs 87 cr on its P&L for switching over to lower tax rate regime, the lender has posted net profit of Rs 13 crore in FY20 from a loss of Rs 197 crore of FY19

After reporting losses for the past several years, Fairfax-backed CSB Bank (formerly known as Catholic Syrian Bank) finally turned around by reporting a profit before tax of Rs 134 crore for the full yearm 2019-20. The lender had posted a pre-tax loss of Rs 300 crore in FY19.

Despite having taken a one-time hit of Rs 87 crore on its profit and loss account for switching over to the lower tax rate regime, the lender has posted net profit (after tax) of Rs 13 crore in FY20 from a loss of Rs 197 crore of FY19. 

For the fourth quarter ended March 31, 2020, CSB posted a pre-tax profit of Rs 22.67 crore, as against loss of Rs 228.67 crore a year ago. The lender's interest income rose by 10 per cent to Rs 388.91 crore from Rs 354 crore the previous year. Non-interest Income almost doubled to Rs 87 crore from Rs 46 crore in the same period last year.

C V R Rajendran, Managing Director & CEO said, “FY 2020 has been a landmark year in the history of the bank as we got listed and have come back to profitability after many years of continuous losses. The profit would have been much higher had the bank not opted for the new tax regime. While we had time up to September 2020 to decide on the new tax regime, we have, after due analysis found migrating to the new tax rates beneficial in the long run and accordingly preferred to take a hit in FY 2020 itself."

FY 2021 is the centenary year for the bank. Rajendran said several positives can be seen in its working results of FY 2020, adding that the bank is on a firm pedestal for future growth. He said its main aim would be to carefully build a stable asset base in the current environment of heightened VUCA (Volatility, Uncertainty, Complexity, Ambiguity), while diversifying the funding base, cutting costs and improving upon margins and fee income.

Due to the re-measurement of DTA and reversal of MAT credit, there was a one-time impact on P&L amounting to Rs 87 crore.  But for this, the net profit would have been Rs 100 crore for FY 2020.The intended benefit of this measure will accrue to the Bank in the following quarters by way of lower tax rates, said the Bank.

Opex reduced from Rs 563 crore in FY 2019 to Rs 533 Cr in FY 2020

The cost-income ratio improved vastly: For full year FY20 it stood at 66 per cent (98 per cent in FY19) and for Q4FY20 it was 56 per cent (123 per cent in Q4FY19). 

Gross NPA decreased by 23 per cent from 531 crore as on March 31, 2019 to Rs 409 crore as on March 31, 2020. Gross NPA as percentage of advances decreased from 4.9 per cent to 3.5 per cent. Net NPA decreased by 10 per cent from Rs 241 crore to Rs 217 crore. Net NPA as percentage of advances decreased from 2.3 per cent to 1.9 per cent· Provision Coverage improves to 80 per cent from 78 per cent. 

Capital Adequacy Ratio improves from 16.7 per cent as on March 31, 2019 to 22.5 per cent as on March 31, 2020. Leverage Ratio improves from 6.6 per cent as on March 31, 2019 to 8.9 per cent as on March 31, 2020.

CASA mix improved to 29.2 per cent as on 31.03.2020 from 27.8 per cent as on March 31, 2019.