Gold loans continue to be CSB Bank’s lifeline

Kochi: It may be interesting to watch the new business directions both CSB Bank and Manappuram Finance have been taking, of late.

While Manappuran, which is historically known as one of country’s leading gold-loan companies, has been focusing on expanding its non-gold business, Thrissur’s own centenarian bank seems to be building its gold loan portfolio more vigorously than its other asset classes, and more earnestly than even some gold- loan companies.

Manappuram MD & CEO, VP Nandakumar, has already announced the company’s stated policy to gradually diversify away from gold loans in the coming years.

As of December end, 2022, the gold loans accounted for only 58 per cent of Manappuram group’s assets under management (AUM) – down from close to 100 per cent a few years ago.

Look at the CSB Bank’s loan portfolio break-up, post the entry of Fairfax group around five years ago by infusing around Rs1,200 crore into the bank’s capital to acquire a majority stake.

Gold loan is CSB’s largest asset class

The bank has been riding the wave of gold loan growth in order to build a secure and sustainable loan book. And moreover, this has helped the bank to not only maintain a steady profit growth but to enjoy a healthy capital adequacy too.

As of March end, 2023, when the financial year 2022-23 (FY23) drew to a close, gold loans accounted for close to 47 per cent of CSB Bank’s total advances.

CSB Bank’s MD & CEO, Pralay Mondal, has already made it amply clear that the bank doesn’t have any plan to bring down the size of gold loan portfolio abruptly.

While the total advances of CSB Bank, the lender with the second largest market cap (Rs4,270 cr as on April 3) in Kerala, after Federal Bank, grew from Rs15,997.99 crore to Rs20,841.66 crore year on year (YoY) representing 30.28 per cent growth, its gold loan portfolio soared 47.71 per cent to Rs9,692.80 crore.

During the year, the CSB Bank’s deposits increased from Rs20, 188.3 crore to Rs24,505.81 crore, staging a 21.39 per cent growth year on year (YoY).

Advances surge for Federal & SIB

Federal Bank and South Indian Bank (SIB), the largest and the second largest banks from Kerala in terms of assets, also witnessed decent growth in their advances during the 2022-23 financial year (FY23) for which the provisional balance sheet statistics are available.

While total advances of Federal Bank during the year expanded 20.2 per cent from Rs1.48 lakh crore to Rs1.78 lakh crore, that of SIB too witnessed a smart growth of 16.65 per cent - from Rs61,816 crore to Rs72,107 crore as of March end, 2023.