CSB Bank CASA to remain at 30-31%

The current account savings account (CASA) ratio of CSB Bank will remain at an average of 30-31% for next one year as the bank will adopt a more diversified liability strategy, says managing director and chief executive officer Pralay Mondal.

“When you grow faster than what you have grown in the past, a lot of that will not come through CASA. It will come through other liability strategies. We will not sacrifice growth,” he said, adding that CASA will remain in the range of 30-31% for another year for this reason.

Many of the bank’s peers have been witnessing a decline in the share of CASA deposits as customers have tended to prefer term deposits as the interest rate for this category of deposits has risen in recent months. CASA ratio of the banking industry is at around 41.6%, latest data from Reserve Bank of India (RBI) showed.

CSB Bank’s overall deposits grew 21% year-on-year to `25,438 crore as on September 30. Advances rose 27% to `22,256 crore.

In the current financial year, the bank expects both advances and deposits to grow at a faster pace than the banking system. Also, it will end the current financial year with a net interest margin (NIM) of above 5%.

While the net interest margin fell 76 basis points to 4.84% in July-September due to lower yields in the key gold portfolio, Mondal feels that the margin has bottomed-out in the near-term.

“Gold prices fell by 3-4% last quarter and because of this, we wanted to be careful on the breaching of LTV. So, we exited some of the high yielding portfolios and hence, gold loan yield came down last quarter,” he said, adding that the gold loan prices have now bottomed-out and this will aid margins for the remainder of this financial year.

Currently, gold loans comprise 47% of the bank’s loan book. Corporate, small and medium-sized enterprise (SME) and retail loans make up the remaining 53%.

“On liability, we are adding premium businesses. NRI business is a key focus area. We are launching a few things on transaction banking,” Mondal said, adding that apart from products, technology will be a key focus area going ahead.