CSB Bank soars 10% as Q2 net profit rises 72% YoY; pares gains later

Net profit was aided by higher net interest income (NII) and lower provisioning

Shares of CSB Bank moved higher by 10 per cent to Rs 336.85 on the BSE in Monday's intra-day trade after the bank reported 72 per cent year on year (YoY) jump in net profit at Rs 118.57 crore in September quarter (Q2FY22). This was aided by higher net interest income (NII) and lower provisioning. The private sector lender had reported profit of Rs 68.90 crore in the year-ago quarter. The bank's NII grew 21 per cent YoY at Rs 278 crore.

ICICI Securities had expected NII to grow 25 per cent YoY, which is slightly lower than its recent historical trajectory due to slowdown in advances. Largely stable C/I and sequential fall in credit cost should help the bank to post a net profit of Rs 77 crore, up 12 per cent YoY, the brokerage firm had said.

However, at 02:51 pm, CSB Bank erased most of its intra-day gain and was trading 1.6 per cent higher at Rs 310.85 on the BSE, as compared to a 0.18 per cent rise in the S&P BSE Sensex. Trading volumes on the counter rose over eight-fold with a combined 4.26 million equity shares changing hands on the NSE and BSE.

Gross non-performing assets (NPA) and net NPA ratios improved to 4.11 per cent and 2.63 per cent as on Q2FY22 from 4.88 per cent and 3.21 per cent, respectively as on Q1FY22 with restrictions pertaining to lockdowns being eased. "Gross NPA and Net NPA ratios, excluding gold, works out to 2.09 per cent and 1.14 per cent as on Q2FY22. With the opening up of the economy, positive trends are visible in the asset quality front," CSB Bank said.

Net advances for CSB bank were up 12.22 per cent YoY at Rs 14,070 crore, driven mostly by the non-gold lending segment. Gold loans, which have been a focused segment for the bank, grew at 10.33 per cent YoY at Rs 5,460 crore.

The management said lot of good work has gone in managing the portfolio stress, both, in gold and non-gold portfolios and SMA/NPA levels were kept under control. Though treasury could not contribute much on the other income front, the gap was more or less covered by way of increased PSLC/Bancassurance/Fee incomes.

"As the impact of Covid is not fully ascertained, Bank decided to continue with the accelerated provisioning policy for stressed and NPA Accounts. We have experienced the returning of demand in MSME, SME and WSB segments during the last part of the quarter. Visible growth is also happening in Gold loan portfolio. In terms of growth, we look forward for better traction and results in the third quarter," the management said.