CSB Bank is a small sized bank with business concentrated in Kerala (~35% branches) with remaining spread mainly across Tamil Nadu, Andhra, Karnataka, and Maharashtra. CSB Bank has staged a good comeback post capital infusion and change in the ownership with Fairfax becoming single largest shareholder in 2018. Backed by the strong parentage of Farifax group, more than adequate capital, relatively better asset quality and growth in gold loan portfolio, CSB bank delivered return on asset (ROA) around 1.8% and return on equity (ROE) of 17% in FY24.CSB bank has articulated its long-term vision as per which by FY 2030, bank’s loan portfolio will be well diversified with 20% in gold loans, 30% retail, 20% SME and 30% wholesale and other businesses. The bank plans to maintain over 45% of its advances in gold loan product over the near-to-medium term, and hence, most of benefits of gold loans will continue.
Despite short term headwinds, the analysts believe superior growth prospects of India are likely to continue attracting foreign flows in the long run,