CSB Bank reported the highest-ever net profit of Rs 218.40 crore for the FY21 and a net profit of Rs 42.9 crore in the fourth quarter. CVR Rajendran, managing director & chief executive officer of CSB Bank, tells Rajesh Ravi about the bank’s performance and outlook. Excerpts:

What is your outlook for the current fiscal given that you grew by 24% in the last fiscal and the second wave of the pandemic is seen as strong?
No guidance given that the situation is very unpredictable at this point of time. Our desired growth is 25% for the year. Our balance sheet is still very small and growth will not be a problem. First quarter will be very mild and then the Indian economy will come back with a vengeance. I have seen that happen. We will have much more opportunities when the economy is opened up.

From which sector do you see growth coming? Your gold loan has grown 61.3% year-on-year (y-o-y), but sequentially it has slowed down.
Gold loan will continue to be focus area for some more years. We are still a marginal player and my outlets are increasing. More business would be possible with more distribution points. We are also focusing on SME and retail banking.

How is demand for credit, especially gold loans ?
At present, the demand is negative mainly because of gold loan. We have brought down the loan-to-value (LTV) from March 2021 and are focusing on collections of loans given on a high LTV. This will bring down the gold loan portfolio of all players. But then again, in this market gold loan is the only available product. Personal loan is not encouraged and unsecured loans are not there in the market. So, we are moving to the next segment, which is where people who earlier never took a gold loan accept it. Today my average ticket size is Rs 1-1.25 lakh and now we will move to an average ticket size of Rs 3 lakh.

What is your average LTV now and how much gold is under your custody?
Average LTV has come down to 68% and it was 83% at the peak. Gold loan portfolio has grown by 61.3% y-o-y to touch Rs 6,131 crore and the bank has 17.28 tonne of gold in its custody.

Are you worried about NRI remittance slowing down with people returning back from the Middle East?
My market share of NRI deposit is very low. Even though it is 24% of my total deposits, CSB has hardly 3% share of the total remittance coming to Kerala. CSB Bank can still grow in the market because of our small share. We are working hard to increase our market share.

What about slippages in the coming Q1 of the fiscal ?
Gold loan slippages are more, and I am seeing such slippages in the gold loan segment for the first time. Gold loan caters to the lower segment. Corporates are doing well but the daily wage earners are doing badly. We are going slow on collections in the gold loans, but beyond a certain level we cannot do anything. But, our March NPA is lower than December NPA. Corporate loans are doing well. SME is doing alright in selective sectors, it is only small ticket loans that are doing bad. In April 2021, my collection is 93-94%, but that should not be an indicator. We will have to wait further to know the impact. Definitely, there will be an impact.

CSB is planning 200 new branches. What about new products like credit cards?
In Kerala, we will open in the northern side, where we don’t have much presence. We will open more branches in Tamil Nadu, Karnataka, Goa, Andhra Pradesh and Gujarat. Our high focus area will be southern states and the West.

We are also planning to introduce credit cards in tie-up with bigger banks. We are too small to introduce our own credit card. So, we are talking with a leading public sector bank and a private bank to introduce co-branded cards.