They clarified on this - MD said from the day-1 he joined its been regular affair.
https://online.csb.co.in/csbvideo/CSB_Bank_Q2FY22.html
Some good news.
Sorry for the late reply!! Its being a imperative meaning from CONCALL, no direct names had been taken though but its very much imperative from the mention that “some banks are getting aggressive in gold loan”.
Surprised there has been no interaction on this for quite a while and the investing community is still blind to this stock
Hi @falak_kalyani, I have been following CSB Bank for sometime now and also hold a small position…I love the management and the growth on important metrics they have delivered in the last two years post covid… My only concern is their debt and interest coverage ratio…There’s no mention of debt being reduced or any plans to pay off parts of debt in the Q3 FY22 investor presentation…If you also look at the interest expense, that’s on the high side too
I would like if you could cover and elaborate this part…Maybe I am missing something
if IDBI goes to Fairfax, CSB bank will obviously be merged with IDBI as per speculative articles.
paid article but headlines speculating of a possible outcome.
Strong Q2 for CSB :
Credit growth 23.6% 
CASA growth 15.9%,
Total Deposit growth 10.1%
Gold loan growth 47.5%
With 45% of book in gold loan and strong growth, NIM may move up. Management indicated that gold loan yield is going up. Non gold portfolio is close to double digit.
Link: https://www.bseindia.com/xml-data/corpfiling/AttachLive/a9c49301-31f6-4f94-b56b-8529c67b07cb.pdf
Bank informed in last quarter that it has high CAR, negative credit cost and almost 100% PCR.
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This stock looks good both from fundamental and technical points of view.
PAT growth is good and gross NPA is very low. The valuation is attractive.
From a technical point of view, it seems to be in an uptrend as it’s making higher highs and higher lows and recently moved above the 200-day SMA.
Disclosure: Invested
CSB bank seems to have a well charted route for growth upto 2030. Successive quarters should show if it sticks to the path or falters.
speculative IDBI merger can change the outlook completely.
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CSB bank entering the lucrative credit card business.
Best in class nos. by CSB Bank. While other banks have reported solid advances growth, only CSB has reported a deposit growth of 20% YOY, matched only by HDFC Bank. Slippages have degrown at a record 42% with ROE of~23% and PCR of record 91%. 45% of advances are gold loans which have grown at 51% YOY with net NPA of only 0.3%. With a book value of 167, it still trades at 1.4 times P/B , which is very attractive. Serious re-rating candidate in medium to long term. Invested and biased.
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| CSB Bank | Q3FY23 | Q3FY22 | YoY% | Q2FY23 |
|---|---|---|---|---|
| Interest Earned | 592.05 | 527.65 | 12.21% | 555.18 |
| Other Income | 89.9 | 52.16 | 72.35% | 44.94 |
| Total Income | 681.95 | 579.81 | 17.62% | 600.12 |
| Interest Expended | 242.31 | 224.31 | 230.21 | |
| Operating Expenses | 246.2 | 207.95 | 212.55 | |
| Total Expenditure | 488.51 | 432.26 | 442.76 | |
| Operating Profit before Prov.& Cont. | 193.44 | 147.55 | 157.36 | |
| Provisions and Contingencies | -14.96 | -50.56 | -3.73 | |
| Profit Before Tax | 208.4 | 198.11 | 161.09 | |
| Tax | 52.45 | 49.86 | 40.54 | |
| Profit After Tax | 155.95 | 148.25 | 5.19% | 120.55 |
| EPS | 8.99 | 8.55 | 5.15% | 6.95 |
| Q3FY23 | Q3FY22 | YoY% | Q2FY23 | |
| — | — | — | — | — |
| Net interest income (in cr) | 350 | 303 | 15.51% | 325 |
| Net interest margin % | 5.80% | 5.41% | 5.60% | |
| Gross NPA % | 1.45% | 2.62% | 1.65% | |
| Net NPA % | 0.42% | 1.36% | 0.57% | |
| Branches | Dec-2022 | Dec-2021 | ||
| Metro | 133 | 116 | ||
| Urban | 134 | 114 | ||
| Semi-urban | 329 | 286 | ||
| Rural | 47 | 43 | ||
| Total branches | 643 | 559 | ||
| Loan portfolio bifurcation | Q3FY23 | Q3FY22 | ||
| — | — | — | ||
| Gold loan | 45.40% | 37.30% | ||
| Corporate loan | 29.80% | 34.45% | ||
| Retail loan | 13.00% | 13.50% | ||
| SME loan | 11.80% | 14.80% | ||
| Sector wise allocation | Q3FY23 | Q3FY22 | ||
| Agri & allied | 41% | 34% | ||
| Industry (textile, construction, infra) | 13% | 14% | ||
| Services (NBFC, HFC, wholesale, retail) | 31% | 30% | ||
| Retail & others | 15% | 23% | ||
| Q3FY23 | Q3FY22 | |||
| Total cost of deposits | 4.30% | 4.24% | ||
| Yield on advances | 11.02% | 11.59% | ||
| Yield on Investments | 6.41% | 5.54% | ||
| In cr | Q3FY23 | Q3FY22 | YoY% | |
| — | — | — | — | |
| CASA | 7,126.0 | 6,587.0 | 8.18% | |
| Term deposits | 15,538.0 | 12,469.0 | 24.61% | |
| Total deposits | 22,664.0 | 19,056.0 | 18.93% | |
| CASA% | 31.44% | 34.57% | ||
| Q3FY23 | Q3FY22 | |||
| ROE | 22.64% | 26.85% | ||
| ROA | 2.37% | 2.42% | ||
| Book value per share (in rs.) | 167 | 136 | ||
| Cost to income % | 56.00% | 58.49% |
1 Like
CSB bank has tied up with ONE credit card for issuing a co-branded metal credit card.
The same card is also issue by BOB, Federal bank, South Indian bank and SBM bank. Its a good start but getting inroads into the credit card marketshare is tough.
CSB bank has taken a leaf out of Federal bank (one card and FI card) and South Indian bank (one card and SBI cards).
PS: There are startups similar to One card like
Slice (https://sliceit.com/)
UNI (https://www.uni.cards/)
FI (https://fi.money)
2 Likes
Healthy growth all-round.
2% qoq advances growth …
any reason for the same … any seasonality ??
I have been following this company for some quarters now…the nos have been pretty good and stock seems to be trading at reasonable valuations. I was going trough the latest annual report and the following snapshot looks interesting…there has been a strong turnaround over last 5 years and the growth has also increased (management has been guiding for above industry growth for next few years):
Anyone else also following the co and any thoughts?
Thanks,
Ayush
Disc: Invested in family and client acs
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Hi Ayush. CSB bank loan book is highly focussed on Gold loans with same accounting for more than 45% of total loan book. Other part is Corporate + SME. Bank has very low penetration in scalable retail business such as Home loans, PL, VL etc. NIMs will go down in more secured retail. At present, loan book is quite small and Gold loans at 11% is not that scalable since SBI & other PSUs are aggresively going in retail segment. As per my understanding, Bank needs to have a niche growth strategy which is missing plus bank has only regional presence in South. PE of the bank is cheap for a reason. Even Cost income ratio shall be elevated since the bank is in building phase.
I track the BFSE sector closely. Equitas/Ujjivan/IDFCFirst can be better picks since they have setup a niche asset segments and are scaling up now.
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Hi @ayushmit bhai. Following are some reasons in brief on why I had invested.
- Balance sheet strong
- CAR great
- Over conservative (PCR)
- Very low NPA (will remain the same since most of loans are gold loan)
- High NIM (Same reason. They could get high growth in GL coz they charge very less (negative for me) GL Yields of CSB is equal to NIM of GL NBFC)
- Very strong management team and board
- Expecting some event soon. Prob with IDBI. Connecting dots here. Prem Watsa selling assets and raising funds to bid for the bank and chairperson of CSB is ex-IDBI.
- any price rise in gold will act as kicker for loan growth
- Also fares well in recession times. Since Recessionary period will lift price of gold and that will jump GL.
- on negative aspects, banking is such an industry where leader has inherent moat of low cost deposits. And thereby could attract best quality loans at cheap rates yet maintaining quality and margin. Small banks will face such issues. However they have good sticky deposits.
I had written a thread on this and update it periodically. You could find it over here
https://twitter.com/FalakKalyani/status/1390864743066312706?s=19
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Hi Falak, if I could ask, how do you see a merger scenario with IDBI playing out?
Till the time it materialize, it’s better not to consider it for evaluation.
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