CSB Bank, formerly known as The Catholic Syrian Bank, may redistribute its branch network in Kerala, closing some branches where it already has a dense network and adding more in areas like the northern parts of the state. It also has plans to expand its network across other states in southern and western India, a top company official said on Tuesday.
The private sector lender currently operates through 412 branches, three asset recovery branches, three service branches and 290 ATMs across 16 states and four union territories. CSB Bank has plans to add another 425 branches. Kerala, its largest market, accounts for over 60 per cent of its liabilities. However, it has a very small share of the NRI deposit pie and has chalked out plans to grow that.
“Kerala is an extremely good place for liabilities. We capture only 3 per cent of the inflows, which is coming into Kerala for NRI deposits. There are plans, which capture more than 10-12 per cent of it and we have enough branch network. We will continue to grow in Kerala, but the proportion will come down because of the proportion of the expansion that is going to take place outside Kerala,” C.V.R. Rajendran, MD and CEO of CSB Bank said.
Rajendran was speaking with reporters after announcing the details of its upcoming initial public offering (IPO).
“In Kerala, redistribution will happen. We have 100 branches only in Thrissur district, which is too high for us; 10 branches we have already closed. Another 30 branches we may close from Thrissur and spread into North Kerala, Kasargod kind of places. That geography we don’t have enough branches, we may go. But, overall number will remain at 260 only,” he said.
Gold loans accounted for 33 per cent of the bank’s total outstanding loans and given the high yields (average of 11.50 per cent), high growth rate of around 28 per cent (compounded annual growth as of March 31, 2019) and low non-performing assets (NPA) at less than 0.10 per cent, it will remain a big focus area, said Rajendran.
“Gold makes a lot of sense in this country from yield perspective as well as [from] NPA perspective. If we look at it, it is a very good asset class to be in. None of the fluctuations in the price has affected us in the past. So, our processes are well established. Gold will continue to be a predominant portfolio for us, going forward also,” he said.
CSB Bank also aims to grow its lending to small and medium enterprises. Going forward, it expects 30 per cent of its total portfolio will be SME, 35 per cent gold loans and around 15 per cent retail. At the same time, its corporate portfolio will come down to 15 per cent from around 35 per cent over a period.
The Kerala-based bank has set a price band of Rs 193 to Rs 195 a share for its Rs 410 crore IPO. The issue will open for subscription on November 22 and close on November 26. A large part of the issue is an offer for sale, through which ICICI Lombard General Insurance, HDFC Life Insurance, ICICI Prudential Life Insurance The Federal Bank, Bridge India Fund, Satellite Multicom, Way2Wealth Securities and Edelweiss Tokio Life Insurance, among others, are selling their stake.
The fresh issue of shares by the bank aggregates to Rs 24 crore, which the bank will use to augment tier-I capital base to meet the bank’s future capital requirements, which are expected to arise out of growth in its assets and to ensure compliance with Basel III and other Reserve Bank of India guidelines.
For the six months ended September 30, 2019, CSB Bank reported a profit after tax of Rs 44.27 crore on a revenue of Rs 816.71 crore.