Fairfax-backed CSB Bank reported a third quarter net profit of ₹153 crore, flat from the year-ago period's ₹152 crore, according to The Economic Times. The bank's share price nosedived 25% to an intra-day low of ₹403.25 from the day's high of ₹535 on BSE, reacting to the numbers. The price recovered slightly and settled at 16.2% lower at ₹418.55 from the previous close of ₹499.65.
Provisions were significantly higher at ₹87 crore compared with ₹17 crore in the previous year, as reported by The Economic Times. Pre-provision operating profit stood at 32% at ₹292 crore. The bank's net interest income grew by 21% year-on-year to ₹453 crore, while net interest margin for the quarter stood at 3.86% compared with 3.81% in the preceding quarter and 4.11% in the year-ago period.
The bank faced significant asset quality challenges with slippages nearly tripling to ₹197 crore, as reported by The Economic Times. According to bank MD Pralay Mondal, about 60% of the slippages are from SME accounts, with the balance 40% from retail account holders. Mondal expressed confidence that these slippages would be reversed in one or two quarters, stating that the bank is not very worried about these slippages.
Despite the profit challenges, CSB Bank demonstrated strong growth in its lending and deposit base. Net advances grew 28% year-on-year to ₹36,677 crore, supported by a 46% rise in gold loans and 40% rise in wholesale business. Total deposits grew by 21% to ₹40,460 crore, reflecting the bank's ability to maintain deposit mobilization despite the challenging operating environment.
The bank was also rocked by whistleblower concerns raised on social media over alleged misclassification of agricultural loans and evergreening of gold loans, biases in performance evaluation, and unethical practices by managing director Pralay Mondal and other senior leaders. According to Mondal, the bank was not aware of the allegations and it would be difficult to respond at this point, as reported by The Economic Times. The whistleblower concerns added to the market pressure on the bank's shares during the quarter.
