CSB Bank counts on growth trends to expand from a small bank to a mid-sector bank by 2030

Mondal is not a new face in the bank. He joined as president of retail, Small and Medium Enterprises, technology and operations two years ago and became the deputy managing director and interim MD early this year. So, he is quite conversant with the progress of the bank in the new phase.

After the Fairfax group took a majority stake in the Thrissur, Kerala-based bank four years ago, it has been trying to spread its wings. The bank, formerly known as Catholic Syrian Bank, still has around 50% of its branches and operations in Kerala.

Expanding beyond Kerala

“We will remain focused in Kerala where the 100-year-old bank has loyal customers. But at the same time, we are looking to expand beyond the state,’’ Mondal told Moneycontrol.

The bank has a good presence in the southern states, which it is keen to develop further. A large share of 100 branches it is planning to open in FY23 will be in these states.

“After that our focus will be Maharashtra, Gujarat and a little bit in Delhi and Punjab,’’ Mondal said.
He reckons that the bank needs more branches and a wider customer base as it prepares to launch more products.

“Just increasing assets is not enough; we need liabilities too for funding. While western regions of the country are the wealth market, the northern parts are good from the liability side,’’ he said.

He expects these branches to boost the bank’s non-treasury income. Currently, the bank’s ratio of core fee to total income is lower than the banking industry average.

Counting on gold loans

The bank has not done well in mobilising more from insurance, wealth and commission fees while the income from treasury operations and Priority sector lending certificates (PSLCs) has dropped.

Admittedly, gold loans that currently account for 43% of the overall asset mix, will remain as one of the strong points of the bank.

“It grew by 47 percent in the last quarter. But it will be difficult to maintain that growth since it is against a low base last year. But we expect the gold loan growth to be between 40-45 percent for next one year at least,’’ Mondal said.

Kerala and Tamil Nadu are leading this business for the bank with strong support from other southern states. Mondal recognises the need to have multiple products to attract more customers.

“For instance, to strengthen Current and Savings Accounts (CASA), we need customers to have accounts with us. That will happen only when they have EMI (equated monthly instalment), vehicle loan payments etc,’’ he said.

Loan products, credit cards

The bank had several loan products earlier which it will be relaunching under a centralised process. On the anvil are vehicle loans, including for commercial vehicles, and loans for commercial equipment.

The bank is gearing up to introduce credit cards in a month with a partner. As for housing loans, the bank will cater to those seeking premium facilities through a tie-up with Housing Development and Finance Corp (HDFC) Ltd and will directly service the medium-range housing segment needs.

The small size of the balance sheet of the bank prevents it from having a say in large corporate loans but it expects to target emerging corporate entities, Non-Banking Financial Companies (NBFCs) and mid-market companies.

The bank hope to do better in Non-Resident Indian (NRI) deposits with half its branches in Kerala.

“At present it is around 23% of our total deposits. In the last one year, with NRIs having better options outside India, the inward remittances and NRI deposits have not grown much. But I think it will change in another year,’’ he said.

Deposit rates, credit growth

Mondal is firm on keeping deposit rates at a sustainable level as he believes higher rates will attract rate-sensitive customers who may not stay with the bank in the long run.

Overall credit growth in the industry has been 16 to 17%, triggered mainly by the buoyancy in retail and SME sectors. But to reach the pre-pandemic levels, corporate credit should look up.

“We are already seeing signs of this with corporates starting to look at capex and more investment,’’ he said adding that credit growth touched 18-19% in October. The bank has a build, sustain and scale strategy under Vision 2030.

“We want to sustain our current businesses like gold loans, build technology, processes and products for the future and then scale up the activities post-2027 to grow bigger,” Mondal said.