Dear Shareholders,

I am delighted to make my maiden address to the stakeholders of CSB Bank as Chairman of the Board. With the support from the Board of Directors, RBI and our shareholders, I am confident of successfully delivering my responsibilities.

Since my joining the Board, in December 2018, I have been observing the Board of Directors and senior management meticulously following the governance and risk management norms. The entire team at CSB Bank under the leadership of our MD & CEO Mr. C. VR. Rajendran has ensured the effective implementation of our renewed strategies. This includes a prudent risk assessment, business expansion, reducing the NPAs, and turning the underperforming bank to a new age profit making entity. In FY20, CSB Bank had achieved 100 years of its glorious existence. During the Bank’s centenary celebrations, the founders of the Bank were remembered, who had the vision to create an institution for providing employment and livelihood to a large section of the society. It was also a coincidence that during its 100th Year, your Bank came out with its highly successful IPO, and the Bank’s shares were also listed on the bourses, adding another golden feather on its hat. Again, in its 101st year, your Bank opened 101 new branches, across India.

A century old trust capital along with renewed strategies has enabled your Bank to script a success story to emulate. Amidst stress and difficulties in survival in the Indian banking sector, we are among few banks, in the recent past, who not only survived maintaining our own identity but successfully turned around on a well-defined glide path.

Provisioning

In banking, judicious provisioning is akin to sustainable risk management. Bank’s NPA provisions increased by ₹ 60 crores during the year consequent mainly due to the accelerated provisioning policy of the Bank in view of the prevailing uncertainties. Standard asset provisions have increased by 110 crores which include the covid related provision of around 25% on stressed assets starting from one-day default. Your Bank also has been providing 25% on the restructured accounts having more credit risk based on the management judgement as against a requirement of only 5%. The excess provisions held over and above RBI provisioning norm amounts to approximately ₹ 250 crores as on 31.03.2021.

On Performance

Since we began our transformation journey, we at CSB Bank have been building in the much needed operational resilience. We are ahead of the industry in terms of managing NPAs, provisioning, expanding our markets especially, in retail, gold loans and SME space.

I am delighted to say that in FY20 the Bank showed early signs of a turnaround and in FY21 the Bank has put on record a stellar performance despite following stringent provisioning norms. Congratulations to the team CSB for this path-breaking performance. This resulted in a significant improvement in all key performance ratios, earnings per share improved from ₹ 0.88 to ₹ 12.59 and Book value per share rose from ₹ 113.04 to ₹ 125.67. These stellar results had been well taken note of by the investors’ community, thus pushing the market capitalisation to ₹ 6000 crore mark post declaration of this year’s results, the best ever market capitalisation, post listing of shares of the Bank.

I thank the Central Bank and promoters for all the support and guidance. Even during the difficult times our customers and shareholders continued to repose faith in the Bank, and they are indeed partners in our progress. My sincere thanks to them while I seek their continued patronage. My colleague Mr. C VR Rajendran, MD & CEO will elaborate more on our performance in his address.

Banks need to embrace technology and keep updating the acquired technology for delivering customer experience as well as to be able to compete with the fintech companies in credit delivery. Digitalization is engraved in our strategy and in recent years we have made strides in rolling out various internet and mobile banking options. During the year the Bank has launched a virtual account opening application and WhatsApp banking. Further, our team along with our technology partners are working on enhancing the Bank’s digital capabilities. The increased number of internet banking users in FY21 is proof that our digital strategies are delivering results.

Corporate Governance Philosophy

Transparency between the shareholders and prudent risk management are the cornerstones of effective corporate governance. As a significant player in the country’s financial systems, any nonconformity to governance norms can jeopardize the Bank’s very survival leading to exposing customers, employees and investors to enormous financial risks. In recent years, we have seen a few financial entities going through adverse situations leading the regulators to press the reboot button.

The Corporate Governance Philosophy of the Bank is to promote corporate fairness, transparency and accountability, so as to maximize long-term value for all stakeholders. Your Bank is committed to high standards of corporate governance practices and upholds fairness and trust in all its dealings with its stakeholders, in line with its Corporate Governance Philosophy. This philosophy is realized through the Bank’s endeavour in working towards portfolio, operational and reputation excellence. Bank in tune with Corporate Governance Philosophy, follows the principles of ‘arm’s length basis relationship and follows regulatory compliance in its all dealings with related parties. In practice, it follows a more conservative approach than even what the policy had laid down. I believe this Philosophy helped the Bank to be rated as the second-best bank among all banks by Forbes Business Magazine, based on the parameters of general satisfaction and key attributes like trust, fees, digital services, financial advice, etc.

Going Forward

FY21 has been a challenging year for the global economy as the consequences of the COVID-19 hitting most of the sectors. As the signs of devastation began to recede with the beginning of the vaccination, most economies started recovering in the last quarter of CY20 - including India. While the Government, Central Bank and research agencies expected a quick turnaround and an economic rebound in India, the second wave of the pandemic is however is posing enormous challenges, creating an atmosphere of uncertainties. At the CSB Bank, we will closely monitor the external situation as well as keep ourselves agile to mitigate its impact.

We will continue to be a socially committed Bank. In FY20 we ensured stability and in FY21 we have embarked on our journey towards profitability and growth. Our primary objective is to ensure governance and customer delight while creating value for our shareholders. Our workforce is becoming younger year on year. By aligning them with the Bank’s vision we are able to build an efficient workforce and ensure their professional growth. In the coming years, we will also explore avenues for increasing your Bank’s contribution to society under our CSR initiatives. At the same time, we are also looking after the well-being of the CSB family in the fight against the Covid.

Across the world, climate change has a huge impact on financial institutions. It comes with risks as well as opportunities. On the risk side, we will monitor the impact of climate change on segments in our business banking portfolios. We will also move towards sustainable banking through financing energy efficient business models. As we are becoming a digitally enabled new age Bank, we are contributing to the planet by reducing fossil fuel consumption and resources.

Going forward our strategic focus will remain on year-on-year growth. We help many entrepreneurial aspirations succeed through our retail and SME loan products. The majority of your Bank’s clients are micro and small businesses who are pillars of the economy. Amidst economic uncertainties, we have a social business responsibility to make the credit available for those who bank on us. At the same time, we must ensure that the delivered credit is secured. The Board and senior management of the Bank are geared toward managing this twin responsibility.

I wish to make a special mention on the invaluable contribution of Mr. Madhavan Menon, my predecessor chairman for setting up a good corporate governance framework in the Bank and also the sheer professionalism that he displayed during his tenure by sharing unbiased, decisive and professional opinions, keeping in view of all the stakeholders interest at hand and setting the Bank on an all-round recovery path.

I would like to conclude by thanking all our customers for their continued patronage, associates, partners, and other well-wishers for creating value and for strengthening our strategic intent, the Central Bank, and the Securities and Exchange Board of India, and the stock exchanges for all the help and guidance on regulatory compliance. I also thank Govt. of India, various state governments, in particular Government of Kerala and government agencies for the administrative guidance and help they have been extending.

Stay Safe.

Thank you

Madhavan Aravamuthan
Chairman

Since my joining the Board, in December 2018, I have been observing the Board of Directors and senior management meticulously following the governance and risk management norms. The entire team at CSB Bank under the leadership of our MD & CEO Mr. C. VR. Rajendran has ensured the effective implementation of our renewed strategies.

Standard asset provisions have increased by 110 crores which include the covid related provision of around 25% on stressed assets starting from one-day default. Your Bank also has been providing 25% on the restructured accounts having more credit risk based on the management judgement as against a requirement of only 5%. The excess provisions held over and above RBI provisioning norm amounts to approximately ₹ 250 crores as on 31.03.2021.

Our primary objective is to ensure governance and customer delight while creating value for our shareholders. Our workforce is becoming younger year on year. By aligning them with the Bank’s vision we are able to build an efficient workforce and ensure their professional growth. In the coming years, we will also explore avenues for increasing your Bank’s contribution to society under our CSR initiatives.