Dear Shareholders,

Despite challenging times never seen in a century, CSB’s FY 21 performance has been encouraging, one of the best of its kind and we can very well relate it to the story of Chinese bamboo - a popular metaphor for sustainable business growth.

When the seed of a Chinese bamboo tree is planted, we don’t see any outcome for almost 5 years, despite watering it every day. In those initial years lack of reward for the hard labour can be a trigger for getting disheartened and quitting. Those who persist, will see that on the 5th year the bamboo sprouts have started coming through the surface. After the first breakthrough, they grow with phenomenal speed, even few feet in a day. During the initial years when there was no visible outcome on the surface, root networks were growing forming a strong foundation for the future exponential growth.

In FY20 we had emerged from long years of subdued performance by streamlining our operations, infusing capital, filling skill gaps and strengthening the balance sheet. We could attract enough investor interest by changing our strategies to survive and stay on the course since 2016. From FY 21, we have commenced our journey towards growth and our stellar results give testimony to this. I am confident that in the years to come, CSB will become a formidable force in the banking sector by creating value for all its stakeholders.

COVID 19 Impact

The economy, especially micro, small businesses and service sector, was impacted by the COVID 19 pandemic. While the world has been gradually recovering from COVID 1.0, the second wave and the spread of stronger mutations of the virus has hit the ground negating the recovery gains. At many a place, the healthcare infrastructure is fully occupied with patients and they are unable to admit new critical cases leading to unfortunate casualties. In order to alleviate the spread, many states have declared partial or full lockdown. Vaccination drives are happening across the country. But vaccinating the entire population of the country is a massive challenge that the governments are facing. Both Central and State governments are collectively working on this and other nations are also supporting us to succeed in this critical task. Let us be optimistic that going forward, economy will recover and humanity will contain the virus with the help of science.

We were able to successfully surmount one of the most challenging times, with clear focus, prompt response to regulatory cues, coherent business strategy, digital push, technology support, strong processes, emphasis on business continuity planning and above all the dedication of our staff.

On FY21 Performance

Details of the financial performance has been highlighted in various chapters in this report, however let me take you through few highlights.

In deposits and advances front, we grew 21% and 27% respectively. CASA grew by 33% while advance growth was powered mainly by 61% growth in gold loan portfolio. The Bank recorded an all-time high net profit of ₹ 218.40 crore in FY21 as against ₹ 12.72 crore in FY20, an increase of 1617%. Our income too increased to ₹ 2,273.11 crore in FY21 from ₹ 1,731.50 crore in FY20. Interest income during the year was at ₹ 1872 crore as against ₹ 1510 crore in the previous year. Asset quality improved as the gross non-performing assets (NPAs) fell to 2.68% of the gross advances as of March 31, 2021 as against 3.54% by end of March 2020. In absolute value, the gross NPAs amounted to ₹ 393.49 crore, compared with ₹ 409.43 crore a year ago. Net NPAs also fell to 1.17% (₹ 168.81 crore) from 1.91% (₹ 216.94 crore)

  • Net Interest Income of the Bank improved from ₹ 592 Cr to 941 Cr recording a growth rate of 58.94%.
  • Treasury gains, Sale of PSLC, recovery of bad debts and growth in fee income helped to boost the Non Interest Income from ₹ 222 Cr to ₹ 401 Cr.
  • Total staff cost for FY 21 amounted to ₹ 497 Cr with an increase of 50% y-o-y on account of increase in head count, the change in actuarial assumption on mortality, VRS, AS 15 provisions etc.
  • Bank is holding an amount of ₹ 156 Cr as provision for NPA accounts over and above the RBI provisioning norms, as per the accelerated provisioning policy followed by the Bank. Further Bank is holding an additional standard asset provision amounting to ₹ 89 Cr in excess of the RBI requirements.
  • CD Ratio (Net) of the Bank improved by 345 bps (71.98% to 75.43%).
  • CASA Ratio of the Bank improved to 32.19 % from 29.17%.
  • Provision Coverage Ratio of the Bank stood at 84.89%.
  • Yield on advances improved from 10.56 % to 10.97%.
  • Cost of deposits reduced from 5.91% to 5.07%
  • NIM improved from 3.74 % to 4.81 % with an increase of 107 bps.
  • CRAR ratio of the Bank is 21.37 % against the regulatory requirement of 10.875%.
  • Cost to income ratio of the Bank is 54.31% vis a vis 65.53% on 31.03.2020.

Despite the challenges posed by the pandemic, we could achieve a historic milestone of opening 101 branches in this 101 st year of Bank’s existence. Out of these 101 branches, 92 branches were opened outside the home state to reduce the concentration risk in a single geography. The footprints were expanded mainly in to the states of Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Maharashtra and northern parts of the country.

Opportunities

In the external as well as internal environment, we have abundant opportunities for growth. At the organizational level we have people, processes and product capabilities to enhance the performance at the bank level. In terms of business per branch, today we are about 60% of the industry average. This leaves us with a potential to grow further by capitalizing on our newly gained operational capabilities.

As we have achieved the critical transformation of the Bank, we will now fully focus on growth in FY 22 and beyond. We are devoid of the instabilities which deterred our performance and growth in the past. Gold loans, Two wheeler loans, Agri loans, MSME and SME segment will continue to be in the main focus. Revised structure and policies are in place for SME vertical and the focus will be on select segments, customer priorities and value proposition. Retail team, will be working on improved product offerings and the related process framework with due focus on customer acquisition. While going digital will be the mantra, we also plan to add close to 200 branches to our network in FY 22 so that there is proper mix of brick and click banking. Though we may have to wait for a month or so to fully understand the impact of second wave of COVID 19, we are optimistic in our outlook to continue the good work in FY 22 as well.

Risks

Banking sector is known for its intrinsic risks. The corner stone of our transformation to a profit making bank is all about how we managed risks.

As I mentioned, in the present environment, the external uncertainties might pose some risks and challenges. If you analyse the balance sheet, it can be inferred that we have made adequate provisioning buffers that will help us to face the unforeseen risks that may come in our way. Our capital and liquidity position is also very strong.

We have instituted prudent risk management controls, policies, and procedures that are critical for the long-term sustainable development of our business.

When concluding, I express my gratitude to our customers for reposing faith and banking on us. I extend my gratitude to the Chairman and esteemed members of the board, shareholders, customers, employees – past and present and well-wishers for their patronage. I also thank RBI, Central and State governments, partners, all other regulators and the general public for all the guidance and support we have been receiving especially during this challenging times.

Please continue to Stay Safe.

Thank you

C VR Rajendran
Managing Director & CEO

In FY20 we had emerged from long years of subdued performance by streamlining our operations, infusing capital, filling skill gaps and strengthening the balance sheet.

In deposits and advances front, we grew 21% and 27% respectively. CASA grew by 33% while advance growth was powered mainly by 61% growth in gold loan portfolio. The Bank recorded an all-time high net profit of ₹ 218.40 crore in FY21 as against ₹ 12.72 crore in FY20, an increase of 1617%.

Despite the challenges posed by the pandemic, we could achieve a historic milestone of opening 101 branches in this 101 st year of Bank’s existence. Out of these 101 branches, 92 branches were opened outside the home state