CSBBANKNSEQ1 FY2026August 13, 2025

CSB Bank Limited

8,313words
67turns
7analyst exchanges
3executives
Management on call
B.K. Divakara Executive Director
CSB BANK
Satish Gundewar Chief Financial Officer
CSB BANK
Rajesh Choudhary Chief Technology Officer
CSB BANK
Key numbers — 40 extracted
4%
e inflation forecast has been revised lower. However, the projections for the next year are above 4%. The deposit and credit growth in the system is evenly balanced right now with deposit growth o
INR119 crore
will be rebooted. Coming to financials, specifically on profitability, net profit for Q1 stood at INR119 crores, up by 5% year-on-year. Operating profit of the bank grew by 28% on a Y-o-Y basis and stood at
5%
ing to financials, specifically on profitability, net profit for Q1 stood at INR119 crores, up by 5% year-on-year. Operating profit of the bank grew by 28% on a Y-o-Y basis and stood at INR 220 cror
28%
profit for Q1 stood at INR119 crores, up by 5% year-on-year. Operating profit of the bank grew by 28% on a Y-o-Y basis and stood at INR 220 crores. Other income registered a robust growth of 42% on a
INR 220 crore
, up by 5% year-on-year. Operating profit of the bank grew by 28% on a Y-o-Y basis and stood at INR 220 crores. Other income registered a robust growth of 42% on a Y-o-Y basis and constituted 19% of total in
42%
w by 28% on a Y-o-Y basis and stood at INR 220 crores. Other income registered a robust growth of 42% on a Y-o-Y basis and constituted 19% of total income for Q1 FY '26. Cost to income ratio was lowe
19%
INR 220 crores. Other income registered a robust growth of 42% on a Y-o-Y basis and constituted 19% of total income for Q1 FY '26. Cost to income ratio was lower at 64.70% as on Q1 FY '26 as agains
64.70%
Y-o-Y basis and constituted 19% of total income for Q1 FY '26. Cost to income ratio was lower at 64.70% as on Q1 FY '26 as against 67.69% a year back in Q1 FY '25. Despite the interest rate transmiss
67.69%
f total income for Q1 FY '26. Cost to income ratio was lower at 64.70% as on Q1 FY '26 as against 67.69% a year back in Q1 FY '25. Despite the interest rate transmission dynamics between advances and de
3.54%
ion dynamics between advances and deposits in a falling rate scenario, NIM could be maintained at 3.54%. We do not expect NIM to go down further from this level. ROA for the quarter ended 30/06/25 stoo
1.03%
do not expect NIM to go down further from this level. ROA for the quarter ended 30/06/25 stood at 1.03%. As we know, our bank has a history of continuing to grow the ROA through the quarters and peaks
20%
and the funding base, deposit growth momentum continues to be faster than the industry - grew by 20% Y-o-Y amidst an industry growth of around 10%. CASA grew by 13% Y-o-Y, and the CASA ratio stands
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Guidance — 20 items
Pralay Mondal
opening
“The inflation forecast has been revised lower.”
Pralay Mondal
opening
“However, the projections for the next year are above 4%.”
Pralay Mondal
opening
“We expect the banking sector NIM to stabilize soon and the liquidity to remain comfortable.”
Pralay Mondal
opening
“On financials, the quarter gone by will be recorded as one of the most exciting quarters in our SBS 2030 journey in view of the challenges it threw, the efforts and dedication we put in and what we achieved.”
Pralay Mondal
opening
“It has been an extremely exciting quarter for us - from execution of this long-awaited transformation journey on the technology side, and all of us have been busy focusing on this particular aspect this quarter because based on this only, the future of the bank will be rebooted.”
Pralay Mondal
opening
“We do not expect NIM to go down further from this level.”
Pralay Mondal
opening
“Like ROA, ROE also progressively grows for us quarter-on-quarter, peaking in the fourth quarter and which again, this year will be no exception.”
Pralay Mondal
opening
“However, we have recovered a decent amount subsequently in Q2 and expect portfolio quality to improve in this quarter itself.”
Pralay Mondal
opening
“Given the complexities involved in such a massive project, it will take a couple of months more to fully stabilize everything.”
Pralay Mondal
opening
“Once the systems are stable, we will kick-start the scale phase with a lot of confidence as we will be in a better position to serve our customers by providing innovative customized products, straight-through processes, seamless digital experience, higher operational efficiencies, etc.”
Risks & concerns — 11 flagged
Though USA has announced the new tariffs, individual countries are still negotiating, making the outcome uncertain.
— Pralay Mondal
The deposit and credit growth in the system is evenly balanced right now with deposit growth on the rise and credit growth on the decline as compared to previous year.
— Pralay Mondal
RBI may cut rates further in this fiscal year in the wake of uncertain trade negotiations with the U.S.
— Pralay Mondal
We have been efficiently managing the liquidity risk because in Q4 of last year when liquidity was significantly negative, the bank took a call to manage the liquidity risk carefully.
— Pralay Mondal
As that risk is coming down, we now see our CD ratio at around 92%.
— Pralay Mondal
We have low proportion of risk-weighted assets compared to the industry, which is 40-odd percent.
— Pralay Mondal
As I said before, liquidity, given where it was in fourth quarter, we said that we will not take any liquidity risk.
— Pralay Mondal
One of the points what you are saying, and we have done is that as the liquidity risk in the system is lower, we must start efficiently using the liability and we will use it better.
— Pralay Mondal
Given the sharp decline in rates on the bulk front, I believe the expectation was that the cost of deposits will come down and yet seeing it rising, which is unlike what we are seeing for the rest of industry in general.
— Mona
We will not take risk in this environment at this point of time.
— Pralay Mondal
Thirdly, on the loan growth front, there, we have a small base, and I think growing 20% plus has never been a challenge in that sense.
— Shivaji Thapliyal
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Q&A — 7 exchanges
Q
This one is on the non-interest income. Essentially, last 4-5 quarters, we have seen NII remaining flat. It is the non-interest income, which is allowing us to do higher opex and still report the growth at the bottom line. However, for some odd reason, the disclosures on non-interest income split have been discontinued in FY '25 itself. Would appreciate if that is available to the public in general. That was one. Two, within that, if you can add some color on specifically the fees and commission line. While in past, you have shared that a large part of that is driven by insurance distribution
Pralay Mondal
Bhavesh, last question, I did not understand. What does it mean? Sir, essentially, when we met last time, the story was that we had amassed excess liquidity in Q4 given the situation back then. Now that the liquidity situation has improved at system level, that would allow us opportunities to normalize the excess liquidity which will allow us to fund growth without really taking hit on the NIM. That reduction in excess liquidity is quite small. I think, about INR200-odd crores compared to a loan book, which has sequentially grown by a larger extent. It appeared to be the case where we have fun
Q
Firstly, I missed your opening remarks. Sorry if I am repetitive. On the slippage base, INR139 crores, what would be the quantum of unsecured loans out of this, if any?
Pralay Mondal
Broadly, I can tell you that our unsecured portfolio is around 3% of the overall book. Yes, slippages have increased in the three businesses, which is unsecured personal loan, MFI, a little bit of credit cards. However, slippages will not be more than INR30 crores, INR35 crores. It is not significant. I think to address your question, this quarter, our slippages have been a little higher in SME. That is primarily due to 3-4 accounts. Let me also add that what has happened this quarter is because we were busy on the migration, we had to take some time to reconcile the NPA and the related data a
Q
Sir, my first question is regarding the NIM guidance that you just gave. Don't you think your guidance is very wide?
Pralay Mondal
Yash, I can only tell you that we live in a world today where we do not know what happens after few days. In that kind of a scenario with global turmoil and global uncertainties, it is better to be safe than feel sorry later. It is wide. If you want me to be sharper, I will say that we will be somewhere in between that curve, but it will vary from quarter to quarter. If you take for the full year, I am hopeful that we should be somewhere in between, which is closer to 3.7% or so. Sir, can you please tell me if you factored in rate cut in this? If you have, what kind of rate cut have you factor
Q
A few questions from me. Firstly, on asset quality, so well, traditionally, our book was not so mature. Therefore, it is not really throwing up slippages, even now slippages as compared with the broader banking universe is still under control, but nevertheless, some slippages are transpiring. Where would we put the credit cost guidance for the full year? Where would we put it on a steady-state basis, say, from FY '27 onwards? That is question one. Secondly, from an opex standpoint, you have been making guidance in the past in terms of a glide path, I would like some reiteration or if there is
Pralay Mondal
Thanks, Shivaji, for the questions. I will go one by one. General guidance on the asset quality has always been that GNPA will be less than 2%, NNPA will be less than 1%, and credit cost will be less than 50 basis points. That has been our overall vision till FY 2030. We have been, of course, much lesser than that. Even this quarter, we are lesser. Our guidance for this year is GNPA, NNPA and credit cost all will be lower than where we are in Q1. Of course, we do not know the global uncertainty on account of the tariff announcements. I am just not taking that into consideration. If that happen
Q
I think most of my questions have been answered. Just wanted to ask regarding the ROA guidance. Previously, it was like in the range of 1.5% to 1.8% for the entire FY '26. Right now, you just mentioned that we will be touching around 1.5%. Are we like having 1.5%, I mean essentially reducing the guidance? Is it?
Pralay Mondal
Thanks, Rushikesh, for your question. What I said was 1.5% ROA and 15% ROE is our Lakshman Rekha. We normally will not go beyond that. If we have that opportunity, we will do higher than that. Having said that, we all know the environment that we are in today. Not only us, if you look at the entire ecosystem, there are challenges in the ecosystem. There are both known unknown challenges and unknown known challenges right now, which are mostly coming from global uncertainty. Given that, I think we will be happy to be around 1.5% this year. Our guidance of 1.5% to 1.8% is for our SBS 2030 journe
Q
My question is mainly regarding your gold loan yields. How do you see your gold loan yields moving from here?
Pralay Mondal
Our gold loan yield typically has been in the range of 11.5% to 12%, depending on which products we are offering. Because of the regulatory guidelines that have come now, it is very clear. It is no longer a draft, no longer any guess work, it is in clear black and white. We know what business we can do, what business we cannot do. Hence, I think our higher-yielding businesses will grow a little more because the loan against securities business, which was more of a re-pledger kind of business that comes slightly at a lower yield will come down and part of it will move to gold loans at a higher
Q
Thank you very much. We had a wonderful conversation, and thanks for patiently listening to us. Look forward to our next quarter analyst call again. Thank you very much. Have a wonderful evening.
Management
Speaking time
Pralay Mondal
29
Moderator
9
Mona
8
Yash
6
Bhavesh Kanani
5
Yash Dantewadia
5
Shivaji Thapliyal
2
Satish Gundewar
1
Rushikesh Bhise
1
Rajesh Choudhary
1
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Opening remarks
Shivaji Thapliyal
Thank you, Muskaan. Good evening, and a warm welcome to all those who have joined the call. The CSB Bank management is represented by Mr. Pralay Mondal, Managing Director and CEO; Mr. B.K. Divakara, Executive Director; and Mr. Satish Gundewar, Chief Financial Officer. We specifically thank the management of CSB Bank for giving YES Securities the opportunity to host their results call. The management will first be making some opening remarks, after which we will throw the floor open for questions. I now invite the management to make their opening remarks. Pralay, over to you.
Pralay Mondal
Thank you, Shivaji, and thank you, everybody, for joining the Q1 FY '26 call of CSB Bank. I will start with the global scenario and then get into CSB specifics. Global trade is impacted by uncertainties of U.S. stance on its tariffs with other countries. Though USA has announced the new tariffs, individual countries are still negotiating, making the outcome uncertain. This uncertainty is getting reflected in currencies, rates and commodity prices. UK and EU have cut rates while U.S. Fed continues to hold on its rates. With weakening data in the U.S., it is likely that FED will cut rates further in the coming months. Global growth forecasts have been revised downward by major forecasters in recent months. Indian growth has been steady over the quarter. The series of liquidity measures taken and the rate cuts announced by RBI has brought the rates down on assets and liability both - transmission has been good so far. Liquidity in the banking system has remained in surplus, supporting the
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