CSB Bank Ltd.- Information Note

Source: RHP

For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only

Key Points

CSB Bank provide its products and services primarily through an extensive physical network of branches and ATMs. They operate in 16 States and four Union Territories in India, reaching 1.3 million customers through 412 branches (excluding three service branches and three asset recovery branches) and 290 ATMs, as on September 30, 2019. With over 98 years of history, the bank believes that it has developed a well-recognized and trusted brand in south India, particularly in the states of Kerala and Tamil Nadu, where it has built strong relationships with its customers, which has been one of the key growth drivers. The bank is known for its consistent approach in developing long-term relationships with its customers, based on its local knowledge and experience, amongst other things. The bank’s strong gold loan portfolio is a testimonial to the trust placed in the brand by its customers. Its deposit renewal rate has increased from 88.01% as of March 31, 2017 to 93% as of March 31, 2018 and to 97.24% as of March 31, 2019. Further, its deposit renewal rate was 97.86% as on September 30, 2019.

The bank’s capital position has been significantly strengthened post FIHM’s investment in the Bank. Pursuant to a preferential allotment of equity shares and warrants to FIHM, for which the bank has received Rs721cr in Fiscal 2019 and the balance amount of Rs487cr in Fiscal 2020, CSB Bank has a strong capital base for growth acceleration, something which the bank was not able to accomplish in past due to paucity of capital. As per the Basel III Norms, the CRAR, as assessed by the bank as on March 31, 2019 and September 30, 2019, was 16.70% and 22.77% (including capital conservation buffer), respectively. As on March 31, 2019 and September 30, 2019, the bank’s Tier 2 CRAR stood at 0.67% and 0.66%, respectively and therefore the bank has significant head room available to raise Tier 2 capital to supplement its strong Tier 1 capital base.

Key Risk

If the bank is unsuccessful in controlling or reducing its impaired loans, or if there is a significant increase in impaired loans or deterioration in the quality of the assets that the bank holds as security, the bank’s future financial performance could be materially and adversely affected.

The bank has regional concentration in southern India, especially Kerala. Any adverse change in the economic, political, or geographical conditions of Kerala and other states in southern India can impact its results of operations.

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