CSB Bank profit flat in Q3; shares dip 16% as asset quality deteriorates

CSB Bank's Q3 profit inched up to Rs 153 crore, but shares fell over 16% as asset quality weakened sequentially and credit costs rose despite strong loan growth

Thrissur-based CSB Bank has reported a marginal rise in net profit during the third quarter of the current financial year (Q3FY26) to ₹153 crore, as against ₹152 crore during the same period in FY25.

 

The bank's shares dipped by 16.23 per cent to ₹418.55 on BSE, owing to deterioration in the lender's asset quality on a sequential basis, while its credit cost increased.

 

The Fairfax-backed bank’s net interest income (NII) was up by 21 per cent year-on-year (Y-o-Y), from ₹375 crore for Q3FY25 to ₹453 crore for Q3FY26, and up 7 per cent quarter-on-quarter (Q-o-Q) from ₹424 crore for Q2FY26.

 

Gross non-performing assets were at 1.96 per cent in Q3FY26, as against 1.81 per cent during the second quarter this year. Net non-performing assets were at 0.67 per cent as against 0.52 per cent in Q2FY26.

 

Provisions for the quarter also increased to ₹86.77 crore from ₹63.65 crore last quarter. Cost of funds at the end of the quarter was at 6.46 per cent, higher than 6.32 per cent last quarter.

 

“Our asset quality parameters are well within the guided range, though at a slightly elevated level from Q2FY26. This will be a key monitorable going forward and results would hopefully be visible during the current quarter itself. All other profitability, efficiency, liquidity, and capital adequacy ratios continue to be stable and in line with the expectations,” said Pralay Mondal, managing director and chief executive officer of CSB Bank.

 

The bank’s total deposits grew by 21 per cent Y-o-Y from ₹33,407 crore as on December 2024 to ₹40,460 crore as on December 2025. The Casa ratio stood at 21 per cent during the quarter under review. Advances (net) grew by 28 per cent

Y-o-Y from ₹28,639 crore as on Q3FY25 to ₹36,677 crore as on Q3 this year, supported by robust growth of 46 per cent in gold loans and 40 per cent in wholesale on a Y-o-Y basis.

 

“We are gearing up to start the Scale Phase from the next financial year, where retail growth will emerge as the crucial game changer, where a lot of work is happening. As part of our retail asset journey, we have largely concluded the implementation of full-fledged LMS, LOS and digital rollouts and are now set to proceed with the rollout of new products. On the liability side as well, we will be leveraging modern technology towards ensuring customer delight through seamless processes, well-segmented/customised products and superior digital experience, which will translate into an improved customer acquisition run rate,” he said.

 

Cost Income Ratio improved to 60 per cent for Q3FY26, compared to 63 per cent for Q3FY25 and 64 per cent for Q2FY26. Operating profit was up by 32 per cent Y-o-Y from ₹221 crore for Q3FY25 to ₹292 crore for Q3FY26 and up by 5 per cent Q-o-Q from ₹279 crore for Q2FY26. Return on Assets and NIM were at 1.22 per cent and 3.86 per cent, respectively during Q3FY26.