What is the key highlight of the CSB Bank second quarter results? A quick analysis of the loan book of CSB shows that undoubtedly, the clear shift towards gold loans in the advance mix continues.
Take a look at this. At the end of Q2, gold loans constitute 37 per cent of the loan book compared with 28 per cent in the corresponding quarter in the previous year and 32 per cent in the immediately preceding quarter. The growth in this segment has picked up even sharply in Q2 with the portfolio growing a significant 47 per cent in the quarter compared with 28 per cent in the preceding quarter.
The shift is understandable.
Gold is a safe bet and high-value collateral largely immune to the pandemic effects. That is particularly so considering the steep slowdown in demand for both retail and corporate loans. In fact, the retail book has shrunk 11 per cent to Rs 1,197 crore from Rs 1,344 crore a year ago. Similarly, corporate loan book has shrunk by 3 per cent to Rs 3126 crore.
The share of corporate loans as a percentage of total loan book now stands reduced to 23.3 per cent from 26.4 per cent year ago. Besides gold, the growth is seen in the agri and microfinance loan segment which has grown a massive 391 per cent (from Rs48 crore a year ago to Rs234 crore now). Among industries, the biggest exposure is towards textile and infrastructure comprising 3.48 per cent and 3.10 per cent respectively and in services, loans to NBFCs constitute 11.47 per cent of the total advances.
The second key takeaway is that bad loan numbers--although do not give us the full picture on account of the Supreme Court’s interim order--largely remain steady. Gross non-performing assets (NPAs) declined to 3.04 per cent of the total loans from 3.5 per cent in the preceding quarter. The SC interim order mandates banks not to tag borrowal accounts that are standard as on August 31 as NPAs.
The bank has clarified that even if that portion of bad loans is factored in the book, the GNPAs will be around 3.15 per cent. The real impact of the NPAs due to Covid will reflect in the third and fourth quarter once the SC lifts the stay on NPA classification.
CSB, largely a regional-focused bank, has come out with a healthy quarter with its gold loan play to stay in the competition.
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