Message from Chairman |
Madhavan Aravamuthan
Chairman
Dear Shareholders,
I am happy to address investors and stakeholders of the Bank as we had an excellent year during which the Bank progressed on all the operational and financial performance parameters. This
is indeed commendable as the banking sector across the world has been in a surfeit of external challenges since the outbreak of the pandemic. At CSB, we continue to be resilient.
How the Bank started transforming in 2016-17 and turned around in 2020 to become a benchmark performer in India’s banking sector is known to most of you. The capabilities we gained during these years and the way forward are encapsulated in this year’s report which would focus on sustaining its ongoing pursuit of excellence and growth.
Macro-economic conditions
While the economies across the world were in a process of recovery from the aftermath of the pandemic, the Russia-Ukraine conflict is indeed an unanticipated negative development. The outbreak of the war and the resultant supply chain constraints and trade embargos are propelling commodity prices upwards, from petroleum products and gas to edible oil and food grains. I hope the Russia- Ukraine conflict would not prolong any further failing which its tailspin will have a very adverse impact on the global economy, which is recovering from the debilitating impact of the global pandemic.

The Government of India as well as the Reserve Bank of India (RBI) responded to these developments very cautiously. RBI has been compelled to raise policy rates twice to contain inflation. The rationale behind this decision was the upside risks to India’s inflation trajectory. The Monetary Policy Committee also voted unanimously to remain focused on the withdrawal of accommodation to ensure that inflation remains within the range going forward while supporting the growth. The twin rate increase will indeed have an impact on interest rates across loan portfolios. However, during such unforeseen situations, repo rate increases are expected and considered the most pragmatic way of dealing with the inflationary pressures. The Government’s increased outlay on developmental initiatives like infrastructure development and strong rebound across all other business sectors post COVID, are creating advantageous opportunities for the Banking Sector. I am happy that the FY23 budget has brought a major relief for the MSME sector as the Hon’ble finance minister announced an extension of the Emergency Credit Line Guarantee Scheme (ECLGS) until March 2023.
Our performance
The performance of the Bank has been excellent during the year. A few performance indicators that I would like to highlight are the 23% growth in Net Interest Income and 110% in Profit After Tax. Earnings per Share improved to INR 26.40 YoY (111%) from INR 12.60 in the previous year. Return on Assets and Return on Equity improved to 1.91% and 21.28% which is up by 92 bps and 875 bps, respectively. Net Interest Margin improved to an all-time high of 5.27% and is up by 54 bps. Gross Non-Performing Asset (GNPA) and Net Non-Performing Asset (NNPA) as on 31.3.2022, stood at 1.81% as against 2.68% in the previous year and 0.68% as against 1.17% in the previous year, respectively.
Board level changes
Mr. C. V R. Rajendran, the erstwhile MD & CEO came on board during one of the most turbulent times in the Bank’s history. He was able to put the Bank on a transformation and growth trajectory. On 31st March, 2022, he took early retirement on health grounds. As stakeholders of the Bank, we are indebted to him. I wish to place on record the Board’s and my gratitude for his contributions to the Bank’s turnaround with his vision, tireless efforts, and steadfast implementation of strategies.I am happy that Mr. Pralay Mondal has been elevated as Deputy Managing Director w.e.f. February 17, 2022, from the position of President (Retail, SME, Operations, and IT) of the Bank. Mr. Mondal comes with multiple years of experience in universal banking and his stint includes leading banks like HDFC and Axis Bank. I also welcome Mr. Sharad Kumar Saxena as an Independent Director on the Board. Both of them have many years of Banking and IT related experience, which will surely help your Bank to reach the next level.
Recap of the journey so far and way forward
During the past few years, the leadership of the Bank through their sheer resolve and perseverance scripted a turnaround for the Bank.
The Bank would continue to focus on gold, retail, SME, and Agri advances as its course for growth while taking a cautious approach when it comes to expanding in corporate banking. Other business drivers as visualised includes, the expansion of our branch networks which will continue full-fledged with a focus on more branches to be opened in the Central and Northern parts of the country, growth driven through business verticals’ model, enhancing business per branch using the current infra, leveraging of fixed costs, digitalisation and technology, etc.
The pandemic-induced constraints have thrown new operational challenges for Banks in terms of providing uninterrupted customer service, in addition to the competition against multiple NBFCs and Fintechs, apart from competing with each other.
Sensing the sway in customer preference towards digital banking, your Bank continues to invest in cutting-edge technologies to enhance its customer experience, facilitate secure transactions and improve the reach of its products.
In its quest for reducing the average age of employees, your Bank has onboarded recruits and freshers, who would be trained and placed according to their potential. Nearly 84% of the total number of employees are under the age of 40 as of March 31, 2022
Governance & Social Environment
Your Bank has a robust governance structure with an experienced Board. Your Bank believes that sound corporate governance is critical to enhancing and retaining investor confidence. Your Bank always follows the best practices in corporate governance. It is committed to transparency in all its dealings and places uncompromising emphasis on integrity and regulatory compliance
Your Bank plays a very crucial role in social development especially when it comes to low and middle- income groups. As a responsible citizen, the CSR initiatives of the Bank this year were mainly focused on improving health-related matters in the backdrop of the pandemic in addition to humanising living conditions of the underprivileged, marginalized sections of the society and supporting similar Government initiatives. During the financial year under review, we have supported varied activities - including education, health care, flood relief camps, free COVID vaccination drives, etc. All this and more, we hope to accomplish while expanding our community outreach through our well-thought- out CSR initiatives, to create a more enabling environment for the sustenance and development of all vulnerable sections, both locally and nationally.
At CSB Bank, we have taken earnest efforts to blend the Environment, Social and Governance (ESG) principles with business across. Every opportunity is seen with an ESG lens thereby preserving the core values, without diluting the principles of sustainable development and a better understanding of diverse social and environmental risks. Strategic decisions form a vital part of all policies of the Bank and the same is reviewed on a periodical basis, thereby striking a balance between society and compliance through a continuous evaluation basis. Your Bank continues its journey of excellence, protecting all stakeholders within the ESG assessment framework on a 360 degree.The CSR programmes initiated by Bank are invested in social causes and projects to support education and health measures for vulnerable groups.
Concluding Remarks
I would like to conclude by thanking all our customers, associates, partners and other well-wishers for their continued patronage. I wish to mention my gratitude to RBI, SEBI, stock exchanges, Central Government and State Governments for their guidance and support. I thank our senior management team for their execution capabilities and all the staff members for their committed hard work and determination, which helped us unlock this proud and satisfying period for the Bank. While expressing my gratitude and respect for every employee who risked his life and served the Bank during this pandemic, I would also like to extend my heartfelt condolences to the families of those staff members, who lost their lives due to the COVID-19 pandemic.
Thank you.
Madhavan Aravamuthan
Chairman *
* Mr. Madhavan Aravamuthan stepped down from the position of Part-Time Chairman of the Bank with effect from the close of business hours of June 28, 2022, as his term of appointment as Part-time Chairman and first term as Independent Director of the Bank ended on the same day.