CSB Bank on Thursday reported a 14% year-on-year increase in its first quarter net profit to Rs 61 crore, even as bad loans surged in the gold loan portfolio. The Thrissur-based lender had reported a net profit of Rs 53.56 crore in Q1 of FY21 and a net profit of Rs 42.89 crore in the fourth quarter of the previous fiscal.
The asset quality of the lender deteriorated, with gross non-performing assets (NPA) as a percentage of gross advances standing at 4.88% for Q1FY22, from 2.68% in the preceding quarter and 3.51% in the year-ago period. Net NPA as a percentage of gross advances was at 3.21%, against 1.17 % in the preceding quarter and 1.74% in the first quarter of FY21.
CVR Rajendran, managing director and CEO, said the bank is confident of managing NPAs as the challenges are mainly from the gold segment where recovery is only a matter of time.
Fresh slippages in the quarter under review was seen at Rs 435 crore, of which Rs 337 crore was from gold loans. The gross NPA at the end of Q1 stood at Rs 686 crore, against Rs 401 crore in the year-ago period.
“COVID second wave, coupled with the LTV management of gold loans, did pose some challenges in the first quarter of FY 22. Lockdowns, alternate holidays, slowing down of the economic activity, controlled movements due to strict social distancing norms, lack of transport, etc restricted the customer access to branches, which in turn impacted both fresh pledges and releases. Thankfully, the worse seems to be over now and recoveries are happening in full swing,” he added.
Net interest income of the lender is seen higher by 44.5% y-o-y at Rs 267.8 crore for Q1. Provision coverage is seen lower at 70.20% as on June 31, 2021, compared with 81.73% in the year-ago period.