CSB Bank is turning cautious on gold loans amid price volatility linked to geopolitical tensions, with the lender expecting slower growth in this segment. As per The Economic Times, the bank recorded 53% growth in gold loans during FY26 but is now shifting focus to wholesale and SME lending while leveraging digital capabilities. Billionaire Prem Watsa-backed CSB Bank, with a 53% share of gold loans in its total portfolio, is cautious after the West Asia conflict led to a sharp price correction in the yellow metal. Managing Director Pralay Mondal confirmed that the bank expects gold loan expansion to slow from the 53% growth seen in FY26, with management indicating this shift is driven by both geopolitical uncertainties and regulatory changes. The bank's LTV typically remains between 60% and 65% and wants to maintain this cushion, with a large portion of the gold loan book classified under agri category where the regulatory 75% LTV norm is not applicable. The RBI had come out with a policy last year by which the re-pledger gold loan had to be paused and rundown, and the bank ran off ₹1,700 crore of this re-pledger book, which was classified as working capital under retail loan, effectively reducing the overall gold loan mix below 50%.
CSB Bank reported a 6% year-on-year rise in Q4 net profit to ₹202 crore compared with ₹190 crore in the previous year, aided by lower provisions despite facing higher operational costs. According to the latest financial results, the profit growth came even as the bank's pre-provision operating profit declined 7.29% to ₹29,367 crore from ₹317 crore earlier, due to 9% higher operational expenditure and 20% fall in other income. The bank's net interest margin improved to 3.83% from 3.75% year-on-year, demonstrating enhanced profitability despite challenging market conditions. Net interest income grew 25% to ₹464 crore in Q4 FY26 compared with ₹371 crore posted in Q4 FY25, reflecting the bank's strong lending portfolio performance. Management indicated that credit growth last year ended with around 16% and expects to maintain similar growth rates this year, with guidance suggesting advance growth between 25% and 30% for the current fiscal year. However, as per The Economic Times, the bank's credit growth guidance is more cautious this year due to global uncertainties, with management noting that a lot will depend on the ability to garner deposits.
CSB Bank delivered exceptional growth in its lending portfolio during Q4 FY26, with net advances growing by 26% year-on-year to ₹39,848 crore at the end of March. This performance was primarily driven by a 53% jump in gold loans and a 37% rise in wholesale lending, significantly outpacing the industry growth rate of approximately 16% in the same period. However, as per The Economic Times, the bank's gold loan growth will naturally come down due to a technical correction where it ran off ₹1,700 crore of re-pledger gold loan book that was classified as working capital under retail loan. The bank's total deposits grew by 20% to ₹44,246 crore, with the current and savings account ratio standing at 20% at the end of the fiscal year. For the fourth consecutive quarter in FY26, CSB Bank's deposit and advance growth outperformed industry averages, recording 20% and 27% YoY growth respectively. Wholesale business grew by around 35% last year and the bank expects to maintain similar growth rates going forward.
CSB Bank's recovery trajectory has been supported by improving asset quality metrics, with the gross non-performing assets ratio improving to 1.66% at the end of FY26 from 1.96% three months prior and 1.57% a year back. The net NPA ratio stood at 0.40% compared with 0.67% three months back and 0.52% last year, reflecting the bank's continued focus on asset quality management. Q4 FY26 marked the best quarter in terms of asset quality, with both GNPA and NNPA ratios at their lowest levels for the year. However, asset quality metrics showed mixed performance with sequential improvements but year-on-year deterioration, indicating the bank's focus on maintaining quality standards.
CSB Bank has completed its digital transformation and is now planning to harness its technology spine to spread its offerings bouquet. As per The Economic Times, the bank is launching two new products - a school fee product and a loan against security against mutual funds. Next quarter onwards or maybe second half of the fiscal onwards, a lot of transaction banking products will be launched for wholesale and SME verticals. The bank also expects better growth in the SME book with high single-digit growth this year, compared to no growth last year. Management indicated that the credit-deposit ratio is around 91%, but noted that CD ratio is not everything anymore as there are alternate sources of funding today. The bank plans to launch at least three products every quarter and has already launched Smart Savings, Smart Current, and Freedom Accounts in the previous quarter.
