Catholic Syrian Bank
Company Background:
Catholic Syrian Bank (now known as CSB Bank) was incorporated in 1920 at Thrissur. It is one of the oldest bank from Southern India. The Bank operates through a network of 419 branches and 277 ATMs across India. CSB Bank has filed DRHP and is bound to come out with IPO soon. It is the first Bank where RBI has allowed majority stake by a foreign firm, thus making it a FII owned bank. The bank operates in three main business units namely Retail banking, SME banking & Wholesale banking.
Promoter Shareholding:
Prem Watsa owned Fairfax has agreed to take over the management control with a 51% equity stake at a price of 140 per share in FY 2019. This is a very encouraging sign for the bank and it is a candidate of management turnaround.
Financial Performance:
Net Interest Income reached Rs. 440 crores, growing at 14%. Net Interest Margin continued its upward journey, 2.3% to 2.5% in FY19. Credit Deposit Ratio improved from 64% as on 31.03.18 to 70% as on 31.03.19, owing to credit growth of 14%. The credit growth has not resulted in increase in risk weighted assets, they actually reduced by 5% as the bank’s growth was mainly from high rated corporate loans and gold loans where the effective risk weight is low. The Bank incurred a Net Loss of Rs. 197.42 crore in FY19 as against Net Loss of Rs. 97.47 crore in FY18. The Loss widened due to increase in operating expenditure and accelerated provision made for Non-Performing Assets and depreciation on investments.
On the Asset quality front, the worst seems to be over CSB. While gross NPA reduced from 7.9% to 4.9%, Net NPA reduced from 4.5% to 2.3%. Provisioning Coverage Ratio improved from 62% to 78%. Capital Adequacy improves from 9.9% as on 31.03.18 to 16.7% as on 31.03.19. RBI has mandated that the minimum requirement including capital conservation buffer is 10.875% but the Bank is well above that.
Below is a snapshot of their financial performance: (Figures in 1000’s)
| Particulars | FY18 | FY19 |
| Interest earned | 12,968,059 | 13,475,154 |
| Other income | 1,254,202 | 1,359,177 |
| Total | 14,222,261 | 14,834,331 |
| Interest expended | 9,120,005 | 9,075,609 |
| Operating expenses | 4,358,987 | 5,625,137 |
| Provisions and contingencies | 1,717,962 | 2,107,777 |
| Total | 15,196,954 | 16,808,523 |
| Net Profit/(Loss) for the period / year | (974,693) | (1,974,192) |
| Profit/(Loss) brought forward | (2,190,701) | (3,165,394) |
| Total | (3,165,394) | (5,139,586) |
| EPS | (12) | (24) |
For detailed financial performance and notes kindly click here.
Future Outlook:
The Bank should be able to turnaround as its armed with new management, abundant liquidity, strong balance sheet, growing opportunities in the financial sector in India. New hiring of talented people from other financial institutions should help pave way for future success.