Dear Stakeholders,
Greetings!
Imagine a year where every challenge becomes a new chapter in our story—a
narrative of resilience and transformation. FY 2023-24 has been just that for CSB Bank, a
compelling saga of navigating macro complexities and emerging stronger. Our journey this
year underscores our commitment to progress, even amidst uncertainty. Although we boast a
legacy spanning over a century, our transformative journey truly began in FY 2016-17, with
a significant turnaround in FY 2019-20. In FY 2023-24, we outpaced the growth of banks in
similar categories. Our vision is to become a new-age private sector bank, and we are in
the process of achieving this through our SBS 2030 (Sustain, Build, Scale.) strategy. This
strategy is not just a roadmap but a commitment to excellence and growth in the years
ahead.
The Big Picture
A prominent global publication likened the post-pandemic world economy to the Mona
Lisa—each time you look, you see something different. While this indicates an
increasingly volatile world, the good news for us is that India has remained one of the
fastest- growing large economies globally and an engine of global growth. In FY 2023-24,
it demonstrated robust resilience, exhibiting a growth rate of 8.2%, the highest among
major economies worldwide.
This achievement stands out against a global backdrop of moderated economic growth due
to monetary tightening in developed economies, the crisis in the US regional banking
sector, the ongoing war in Ukraine, and other geopolitical events. For FY 2024-25, the
Indian economy is predicted to grow around 7.3%. Although this growth is lower than the
previous year's estimated rate, it is still much higher than the projections for many
developing economies. The domestic resilience demonstrated in FY 2023-24 indicates that
India is well- positioned to withstand future headwinds.
This resilience is further strengthened by the ethos of 'Sabka Saath, Sabka Vikas,
Sabka Vishwas,' and propelled by the nationwide initiative of 'Sabka Prayas.' The Union
Budget 2024-25 focuses on uplifting four key segments: 'Garib' (Poor), 'Mahilayen'
(Women), 'Yuva' (Youth), and 'Annadata' (Farmer). Additionally, the Indian Government has
increased the infrastructure outlay by 11.11%, from Rs. 10 lakh crore to Rs. 11.11 lakh
crore, contributing to 3.4% of the GDP, with an aim to contain the fiscal deficit within
the 4.5% threshold by FY 2025-26. There are also plans to revamp various schemes, such as
Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) and the Smart
Cities Mission, which are slated for reintroduction.
Moreover, financial markets and banking conditions have remained stable, with credit
growth lending consistently growing around 16% and deposit growth increasing from 12% to
14%, thereby narrowing the gap between them. The Indian banking sector is experiencing a
robust recovery, driven by a wave of transformative government reforms, consumer demand,
enhanced asset quality, and technological advances . Government reforms focus mainly on
enhancing credit discipline, promoting responsible lending practices, and improving
governance standards. By doing so, they have not only boosted the profitability of India's
banking system but have also ensured its sustained growth and robust capitalisation. The
sector is further supported by the introduction of advanced technologies and compliance
frameworks, which are laying a solid foundation for future growth. As the regulatory
landscape evolves, the emphasis on strong governance and risk management is reshaping the
industry, creating an environment conducive to long-term stability and resilience. This
stability is essential as the sector continues to navigate the impacts of global
geopolitical tensions and economic shifts, positioning itself to capitalise on emerging
opportunities in the years to come.
RBI's Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6.5%
for the 7th consecutive time. It also decided to maintain the policy stance of 'withdrawal
of accommodation' in the monetary policy. As outlined in the June 5-June 7, 2024 bulletin,
monetary policy will remain in 'risk-minimisation mode' to align inflation towards the
target while supporting growth. The RBI Governor, Mr. Shaktikanta Das, has emphasised on
achieving an inflation rate of 4.5% in FY 202425.
Building with Purpose
Reflecting on FY 2023-24, CSB Bank's transformation into a full-service, new-age
private bank is marked by a strong focus on technological innovation. Under our SBS 2030
strategy, we concentrate on five key pillars: governance, leadership, technology,
compliance, and execution.
Our robust governance framework ensures rigorous risk management and adherence to the
highest compliance standards, fostering investor confidence and sustainable growth.
Compliance and maintaining the highest standards remain fundamental to our strategy of
aligning our business practices with regulatory requirements.
We have assembled a dynamic leadership team, carefully chosen from a variety of diverse
backgrounds. This diversity, encompassing different experiences, skills, and perspectives,
fuels innovation, stimulates creative problemsolving, and enriches our corporate culture.
This leadership team is the powerhouse behind our strategic initiatives, providing clear
and focused direction towards our organisational objectives. Importantly, they ensure
agility in responding to market needs. By staying in tune with market trends and customer
needs, our leadership team navigates towards opportunities and away from potential risks,
securing our ongoing growth and success.
In line with our growth ambitions, we have made significant investments in upgrading
our technological infrastructure. This strategic move is aimed at building a robust
foundation that can effectively support our expansion plans. A key component of this
upgrade is the ongoing implementation of a new core banking platform viz., Oracle- based
core banking solutions. This state-of-the-art platform is set to be operational in the
coming months, bolstering our digital delivery mechanisms across a wide range of products.
Our commitment to continuous investment in technology will modernise our core systems,
keeping us at the forefront of technological advancements, setting new benchmarks in
service delivery and customer experience.
Concurrently, we have made significant strides in expanding our network, adding a total
of 76 branches in FY 2023-24. We now boast a total of 779 branches and 731 ATMs across the
country. In line with our commitment to providing seamless and convenient services, we are
investing in omnichannel banking. This approach allows customers to access our services
through multiple channels, including online, mobile, and in-person banking.
The investment will also enhance our customer experience and improve accessibility to
our services.
Our focus on execution enhances productivity, customer acquisition, and business
growth. We are strengthening the foundations that help create a 360-degree pan-India
franchise across wholesale, SME, retail, and gold loan businesses, contributing to our
efforts towards customer satisfaction.
Our Performance
Our financial performance has been robust, with total business growing significantly as
deposits grew by Rs. 5,212.99 crore to Rs. 29,718.80 crore from Rs. 24,505.81 crore in the
corresponding previous financial year and gross advances grew by Rs. 3,730.08 crore to Rs.
24,571.75 crore. The total income grew by Rs. 876.17 crore to Rs. 3511.83 crore from Rs.
2635.66 crore in the corresponding previous financial year. Interest income increased by
Rs. 607.89 crore to Rs. 2927.54 crore from Rs. 2,319.65 crore and nontreasury other income
increased by Rs. 223.07 crore to Rs. 536.64 crore from Rs. 313.57 crore in the
corresponding previous financial year. The total operating profit of the Bank increased by
Rs. 72.52 crore to Rs. 779.92 crore from Rs. 707.40 crore and net profit increased by Rs.
19.46 crore to Rs. 566.82 crore from Rs. 547.36 crore in the corresponding previous
financial year. The net interest margin remained robust, exceeding 5%, one of the best in
the industry.
Our capital adequacy ratio stood at 24.47% as against 27.10% in the previous year, and
our return on assets was 1.79% compared to 2.06% in FY 2022-23. Our return on equity
marginally declined to 17.61% from 17.91% in the previous quarter. The gross NPA as
percentage of advances increased by 21 basis points to 1.47% as on March 31, 2024 as
against 1.26% as on March 31, 2023. Net NPAs increased by 16 basis points to 0.51% as of
March 31, 2024 from 0.35% as on March 31, 2023 and the same was mainly due one account
mainly due to one account turned into NPA in the last quarter of the financial year.
Commitment to Sustainability
In alignment with our commitment to sustainable development, we have integrated
Environmental, Social, and Governance (ESG) principles into our core operations. We strive
to create long-term value by prioritising environmental stewardship, fostering social
responsibility, and upholding robust governance standards.
Our ESG strategy includes reducing our carbon footprint, promoting diversity and
inclusion, and ensuring ethical business practices. By embedding these principles into our
decision-making processes, we are dedicated to making a positive impact on society and the
environment.
According to the United Nations, the world is experiencing unprecedented warming. This
is faster than at any point in recorded history. This urgent global issue calls for
collective action, and as a responsible bank, we are doing our part to address it. We are
actively supporting renewable energy projects and discouraging financing for pollutant
industries.
Our CSR programmes are centered around empowering the society through investments in
education, healthcare, and gender equality initiatives that benefit vulnerable groups. We
have allocated budget for these selective activities and are dedicated to expanding our
community outreach through thoughtfully devised CSR initiatives. Our aim is to create a
more inclusive environment that promotes the well-being and advancement of vulnerable
communities at both local and national levels.
We take immense pride in our resilient governance structure, which is backed by an
experienced and professional Board of Directors. Our corporate governance culture plays a
crucial role in fostering and maintaining investor confidence, reflecting our commitment
to the highest standards. We consistently embrace best practices in corporate governance,
demonstrating our unwavering dedication to transparency, integrity, and regulatory
compliance. This commitment not only reinforces our reputation but also strengthens the
trust placed in us by our stakeholders. It is this dedication to excellence that sets us
apart and underscores our position as a trusted and reliable entity in the industry.
On June 27, 2024, our promoter, FIH Mauritius, sold 16,868,645 shares, which
constituted 9.72% of the paid-up capital of the Bank to compliance with the Reserve Bank
of India's directive, which mandates promoters to reduce their holdings in the Bank to 40%
of the paid-up capital within five years from the date of completion of their investment.
This action underscores their commitment to adhering to regulatory guidelines.
The Way Forward
Looking ahead, we are poised to transition into the 'Scale' phase of our SBS 2030
strategy. Our goals are ambitious yet achievable, and we aim to triple our balance sheet
size to become a mid-sized bank with an asset base of Rs. 1 lakh crore by 2030. The
foundation laid during the build phase will support our rapid expansion and drive
sustainable growth. We anticipate completing the build phase of our transformation by FY
2025-26, transitioning into the scale phase from FY 2026-27 onwards.
The period from FY 2026-27 to FY 2029-30 is projected to be a significant growth
take-off stage, marking a major transformation in our journey towards success to a become
mid-sized bank. Our continuous investments in leadership, people, and distribution
products are aligned with our SBS 2030 strategy, underlining our dedication to growth and
development. With a focus on profitability, revenue growth, and attractive EPS, we are
poised to maintaining our market share while maximising shareholder value. We are also
committed to leveraging technological innovation and strategic growth initiatives to
achieve our vision and deliver exceptional value to our stakeholders.
Note of Thanks
I would like to express my heartfelt gratitude to all our valued customers, dedicated
associates, trusted partners, and well-wishers for their support and loyalty. We are
deeply grateful to regulatory bodies such as RBI, SEBI, and Stock Exchanges, as well as
the Central and State Governments for their invaluable guidance and support throughout our
journey. I extend a special appreciation to our senior management team for their
exceptional execution capabilities leading to our success. I would also like to
acknowledge and honour every member of our staff for their dedication, hard work, and
determination. They have propelled us forward, unlocking a period of pride and fulfillment
for the Bank.
Warm regards,
Bhama Krishnamurthy, Chairperson