Four years ago, when Canadian investor Prem Watsa acquired the 100-year-plus private sector CSB Bank (erstwhile Catholic Syrian Bank), the lender was making losses and had assets of ₹15,800 crore, and a loan book of ₹9,300 crore-plus. But the new management under Watsa’s Fairfax Group turned it around. CSB posted a 180 per cent year-on-year growth in net profit at ₹148.25 crore for the quarter ended December 31, 2021. Earlier, it had reported an all-time high bottom line figure of ₹218.40 crore for FY21 against ₹12.72 crore in FY20. Its total assets have risen to over ₹23,300 crore, while its loan book has jumped to ₹14,438 crore in FY21.
The fast turnaround is reflected in the BT-KPMG Best Banks Survey 2020-21 where it has emerged as the Best Small Bank. The Thrissur-headquartered bank, with a major presence in Kerala, Tamil Nadu, Karnataka and Maharashtra, is building a well-diversified business model around retail, SME and wholesale banking. MD & CEO C.V.R. Rajendran says the presence of Fairfax benefits CSB immensely. The bank had been perennially starved of capital, and so funds from Fairfax have proved to be the elixir. The latest figures show that CSB’s asset quality has improved significantly from the preceding quarter, with gross non-performing assets as a percentage of gross advances reported at 2.62 per cent for Q3FY22 against 4.11 per cent in Q2FY22 and 1.77 per cent in Q3FY21. “Earlier, asset quality concerns were mainly in gold loans, due to the reversal of high LTV (loan-to-value) regime that was enabled by the regulator… Overall, a combination of preventive, proactive and supporting strategy has given us the desired results,” says Rajendran, who has decided to take early retirement on health grounds and will leave the bank by March-end.
CSB has opened over 150 branches in the past 12-18 months. Going ahead, the bank plans to open new branches in geographies where it can establish itself quickly and deliver. The bank has also got talent from public, private and foreign banks.
FIH Mauritius Investments, a subsidiary of Fairfax, had infused fresh equity of ₹721 crore in 2018-19 and ₹487 crore in July 2019, taking its stake to 51 per cent. “We are well capitalised and liquid. Going forward, growth will be our driving and deciding factor. Gold loans will continue to be the main focus area. We have plans to build a healthy retail portfolio. We want to embrace digital banking to improve our competitiveness,” says Rajendran, adding that CSB would like to position itself as a bank for SMEs.
The bank, whose IPO was oversubscribed 87 times, had a price-to-book value of 1.85 times (as of February 10), which is higher than many mid-sized banks such as IndusInd, RBL and YES Bank.
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