CSB Bank: Rise in NPAs in gold loans takes the shine off Q1 earnings
While GNPA of CSB Bank has risen, ultimate credit cost – a more appropriate indicator of asset quality for gold loans – is expected to remain low
July 23, 2021 / 11:41 AM IST
CSB Bank said it had suspended recovery efforts during the quarter, keeping the interests of customers in mind.
PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook
CSB Bank (CMP: Rs 323 crore; M Cap: Rs 5,607 crore) posted a mixed set of numbers in the first quarter of FY22. Net profit increased by 14 per cent year-on year (YoY), backed by healthy growth in advances.
However, non-performing assets (NPAs) spiked during the quarter. Shockingly, the surge in NPAs came from gold loans, generally considered to be safest asset category in the retail banking space.
Now, this is very tricky as gold loans constitute around 38 per cent...