Good evening and a warm welcome to all those who have joined the call. The CSB Bank management will be 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 result 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.

Thank you, Shivaji, and good afternoon, or rather good evening to everybody who's on this call, and thank you for joining our Q1 FY27 earnings call. To start with, on the economic scenario, the global economic conditions remain stable despite a surge in geopolitical risks in recent weeks.

US rates have been stable, with probability of rate hikes in this year reducing due to incoming data. India's annual retail inflation rate based on Consumer Price Index rose to 18-month high of 4.38, which is still a provisional number, in June 2026.

This increase was primarily driven by a rise in Consumer Food Price Index, CFPI, which climbed to 5.32. This is largely due to supply-side effects of increase in oil price.

Liquidity situation remains stable and is likely to remain so for the next quarter. Money market and G-Sec rates have softened for this quarter.

However, recent escalation in Gulf war did spook the rates. CSB Bank's liquidity remains quite stable.

On the CSB-specific results, key highlights are on the profitability side, that profit stood at ₹150 crores for Q1 FY27 with a 27% Y-o-Y growth over Q1 FY26. Operating profit for the bank grew by 14% on Y-o-Y basis and stood at ₹251 crores for Q1 FY27.

Net interest income grew by 26% to ₹479 crores. The other income degrew by 7%.

We'll discuss this when you come on the call on this point over Q1 2026, mainly due to decline in treasury profit. Other income, excluding treasury profits, grew by 13%.

If you ex-treasury, we grew by around 13% in Q1 FY27. Cost-to-income ratio for Q1 FY27 was marginally lower than Q1 FY26 and stood at around 64.55%.

NIM for Q1 FY27 stood at 3.66 against 3.54 for Q1 FY26. ROA for the quarter ended 30/6/26 stood at 1.09 against 1.03 in Q1 FY26.

Contingency provisions are held intact, and bank is continuing with the accelerated loan provisioning policy, which will aid the bank in transitioning towards ECL framework. On the liability side, our funding base continued to improve.

Deposits recorded a strong Y-o-Y right growth of 26%, significantly outpacing the industry growth rate of 13.4. CASA ratio stands at 19.41%.

To aid liquidity, we also availed both domestic and FxSWAP borrowings based on cost considerations. On the liquidity side, we efficiently managed the liquidity risk.

Average LCR for the quarter was 123%. NSFR ratio is 126%.

On the asset side, the advances grew by 24% Y-o-Y as against industry growth of 18%. Yield on advances for Q1 FY27 stood at 85% [unclear].

On the asset quality metrics, GNPA and NNPA ratios for the quarter stood at 1.75 and 0.39 respectively. PCR stands at 77.96% without TWL, almost 78%, which is high compared to what used to have before.

Bank is holding a provisional provisioning buffer of around ₹198 crores over and above regulatory requirements, including a contingency provision around ₹105 crores. On the capital side, CRAR continues to be well above the regulatory requirement and stood at 19.96.

Tier 1 ratio stood at 18.96. Our risk weights are somewhere around 42%.

I think we are very, very well capitalized given our risk weights. Shareholder value creation: book value per share stands at ₹289.

EPS for Q1 FY27 stood at ₹35 against ₹27 for Q1 '26. ROE for the quarter improved from 10.9% in Q1 to FY26 to 12.71% in Q1 FY27.

On the distribution side, we have a network of 868 branches and 835 ATMs as on 30/6/26. In conclusion, I'd like to say that the quarter witnessed healthy growth across our key business parameters, especially when you look at Y-o-Y.

We're a very seasonal bank. It's not just one year.

Every year we'll see that Q1, Q2, Q3, Q4 operates differently for us. From that seasonal perspective, we have done well on a Y-o-Y basis.

Our deposits and advances grew by 26% and 24% year-on-year respectively, significantly outperforming their average industry growth trends. Importantly, in contrast to the broader industry parameters, deposit growth outpaced advances growth, resulting in a favorable improvement in our credit-deposit ratio, which is now below 90%—just marginally, just below 90%.

We further tapped the funding streams optimally, leading to a comfortable liquidity position and room for growth. I don't see liquidity as a risk for us at all in the coming year, depending on the growth plans we have.

On the advances front, the corporate and gold portfolio continued to perform well. Amidst the market uncertainties, we remain measured in our approach towards the SME/BLG, as we call it, and other unsecured retail book, consistent with the size of risk appetite, and will resume scale once the environment turns conducive.

Our lending strategy continues to be guided by a balanced focus on profitability, asset quality, and sustainably long-term growth. On the liability side, we are enhancing our sales capabilities depending on distribution reach and driving greater alignment towards customer acquisition channels.

These efforts are expected to drive stronger customer engagement, improve conversion rates, and further strengthen our ability to generate granular and sustainable deposit growth. From a profitability perspective, our operating performance remained resilient.

Operating profit increased by 14%, while net profit registers a growth of 27% over the corresponding period last year. Looking ahead, our objective is not merely to grow, but to grow efficiently by improving operating leverage, increasing employee productivity, deepening customer engagement, and accelerating the payback from our technology transformation initiatives.

We remain firmly committed to delivering SBS 2030 milestones in a progressive and disciplined manner quarter-on-quarter. Just to end my initial comments, I'd say that the entire technology transformation went on extremely well, and now we are going to leverage that.

That's the reason we have just started our retail liability acquisition channel, because now we can launch whichever products we want to. Even on the transaction banking side, our trade, our supply chain, and CMS, all systems, some are already in place, some will be in place in the next 3 to 4 months.

We are looking at enhancing our transaction banking ability and products and services there. We will continue to leverage and build the franchise.

Now the journey really begins for the scale phase in true earnest in terms of scaling the bank with respect to new customer acquisition, more balanced growth across segments, and the franchise creation. With that, I stop.

Over to you for questions. Thank you very much.

Thank you so much, sir. Ladies and gentlemen, we will now begin with the question-and-answer session.

Anyone who wishes to ask a question may click on the raise hand icon from the participants tab on your screen. We request participants to restrict to two questions each, and then return to the queue for more questions.

To rejoin the queue, you may click on the raise hand icon again. We'll wait for a few minutes until the question queue assembles.

Requesting participants to click on the raise hand icon. All participants who wish to ask a question may click on the raise hand icon that we have on the bottom of the page.

We'll wait for a few minutes until the question queue assembles. We'll take our first question from Puneet Balani of Daulat Investments.

Puneet, please go ahead with your question. Puneet, we are unable to hear you.

Please go ahead.

Yeah. Sir, just from the two things.

Firstly that your gold portfolio is now 54% 54% the way you reclassify of the total portfolio. A growth because post the new regulations and everything, some peers have highlighted that they face some struggles with growth.

What are we thinking on that? Are we going to continue to grow gold or there are other sources of growth which we are eyeing?

Accordingly, what's the growth guidance thereof? Secondly, sir, our bulk deposit mix is over 52% of term deposits and it's around 40% of total deposits.

This is something which is inherently volatile and creates pressure on your funding cost also, which I believe is the reason for lower NIMs. Any comment on that, sir?

What is the target here, because that is something I believe is causing a lot of pressure on margins, if I am not wrong?

Thanks. Thanks, Puneet, for your question.

Yes, gold is somewhere around 54%, but we have continued to grow gold at a reasonable pace. Right now, the two businesses which are not only in terms of mix one of the highest, one is gold and one is wholesale.

These are the two portfolio has grown also. To that extent, it has not been such challenging.

Also strategically, we want to ensure that we become a holistic bank, just not a gold loan bank, which has been an objective for our SBS 2030, and hence, eventually, this 54% will have a glide path internally going towards somewhere around 30% by 2030. Hence, other businesses has to grow.

On your question on regulation, etc., one thing which happened is on the re-pledger business, we had, though we could have done it till 1st April this year, but we had taken a call not to renew whatever we were doing. That's why that portfolio came down from ₹2,100-odd crores to around now ₹60 crores.

Effectively, it's gone. It will also run off by next quarter.

That was not under gold loan, that is under retail. That's one of the reasons we call it LAS.

That's one of the reasons you are seeing that both retail disbursements as well as retail portfolio has degrown. Primary reason is that we have kind of a run-off that ₹2,000 crore portfolio on a small retail portfolio.

Overall, I think that directionally, we'll continue to have gold loan somewhere around 50% this year, and then gradually peg a glide path over the next 3 to 4 years closer towards 30%, primarily because of growth of other businesses will go up. On the otherwise, most of the regulations we have sort of implemented.

There are positives and challenges, both. Positives are now renewals are allowed.

Hence, operationally, this becomes a little easier. Of course, there are challenges in terms of end-use monitoring and things like that, where we have put and we are continuing to putting more and more processes in place.

On your question on deposit mix, yes, bulk is around 52% right now, and retail is around 48%. That's the reason, no rocket science, that our cost of funds is slightly higher.

This is done to fund building a long-term franchise, and eventually as and when the CASA franchise starts building and as and when that granular retail is a function of the CASA franchise that starts building, I have already told that will start happening from FY28 onwards, because we just launched our systems last year, products are being built, sales team is getting in place. It's a kind of a high road which we have to take and build that franchise.

Today, we are ready to build that franchise. We have the machines to build that franchise, the teams to build that franchise.

Till then, we cannot wait for that to build the asset side of the business of the balance sheet. That's why we're funding it with a slightly higher cost.

Our cost of funds is somewhere around 3.5 sorry, 6.5, and that's the reason. Volatility, as I said before, funding is not a problem.

Volatility is not a problem at all for us. Because as you saw that LCR is 123%, the reason we don't take it further up is because anything taking further up with this kind of funds is inefficient for the bank.

Why is it not volatile? Because when we do bulk, primarily we do non-callable, with clear tenor in place so that it is well-planned.

We also have funding in form of FCNR, in form of CDs, in form of refinance. Of course, CASA and retail deposits and bulk deposits and wholesale deposits all are in place.

Given the size of our balance sheet, which is reasonably small, managing this is not a problem at all. Funding, volatility, and risk is absolutely not there in the bank.

Yes, cost of funds is slightly higher because we primarily focus on non-callable deposits.

Got it, sir. Firstly then the NIM decline is only because of the bulk deposit mix increase, right?

Is that a fair assumption to make mostly?

Yes.

See,

when I see the breakup of where my higher cost is, one is bulk deposit, one is FxSWAP, and one is CDs. Now all these as and when the overall stabilization happens will reprice itself faster than the retail deposits, okay?

I'm not kind of a saying that we should replace or do bulk and CDs because of that reason, but we must do retail. Given where we are purely from a financial perspective, as and when the yield curve improves, for example, if there is really a lot of FCNR deposits comes to the country, liquidity will improve.

Once liquidity improves, hopefully CD prices also would show some softening. All that will help us both in bulk and CDs in the near future.

Long-term, we have no choice but to build retail deposits, because that's the only way franchise will build. Tactically we are okay, but strategically we have to build the retail.

Yes, you're right. At this point of time, what had also happened, because while all the numbers I read out are looking good because they're year-on-year, but you may have questions quarter-on-quarter.

The answer to that is that some of the deposits which we brought in in March-end of 2026, they didn't have cost in Q4, but their cost all came in Q1. That's the reason this is a flow-through which is happening.

As we're talking, we are not seeing deposit prices elevating anymore. If at all, there's a marginal softening which is happening.

As and when it replaces, hopefully things will start getting better on the NIM side. The other reason, which is a fluctuating number, is also NIM to some extent gets impacted with your slippages and things like that.

For us, we had a little bit of a funny story where Q3 had high slippage, Q4 we had a lot of upgrades and recovery, again in Q1 there's a little bit of a slippage. That also impacts slightly in the overall NIM.

Overall, I think like last year also in the first quarter, I said this is the worst-case scenario. This year also, this NIM is the worst-case scenario.

We'll only improve from here.

Got it. Just structurally on the mix, because you are saying the products are in place and it will take time.

Say, the mix decline should be visible maybe from next year onwards, or how should we see that trajectory going forward for the mix?

This year This year you will see gold coming to somewhere around 50%. We are around 54%.

Okay. No, no, I was referring to the bulk deposit.

Oh, sorry. The

deposits.

No,

that is going to take little time, because we also have to see that building a retail franchise when you are just launched products, will be first the CASA we have to get in, and then we have to get in the retail deposits. You will start seeing, and this is not the first time I am saying, I have said before also, you will start seeing that.

The plan is that CASA will grow as much of the deposits only in FY28 onwards. FY29 onwards, CASA will do better than deposits, and hence, that's the time you will see a improvement in CASA ratio.

This year will be lucky if we continue to hold the same CASA ratio, because if you have to grow by 25% minimum and if our CASA then also we have to grow by 25%, we have to see if we can do it or not. We're trying.

We're putting our sales machinery in place. If we do a good job, I think our CASA ratio will remain the same.

Right. Sir, on the yield front, your yield on gold loan has declined, and also on the BLG book, the yield has declined.

What is the reason for that just on a QoQ basis? Is this something just the seasonality this thing, or maybe there is something else to it?

On gold loan, yield has not really declined too much. It has come down from 12 point something to 11.81 or something like that.

Those things can happen little bit here and there. There is no specific reason, because we didn't decrease the gold yields.

It could be just a mix of some products, businesses, etc. It went down from Where is gold?

Ha,

12 to 11.85,

15 basis points. That's what I said.

On the SME or BLG side, it went down from 9.81 to 9.25. One of the reasons for this is that SME, given the environment, and given the size and geography we operate, we are just being a little more cautious and careful, because who knows whether tariff is coming back again or not, who knows what is happening to waste to share prices.

With all the supply chain challenges, etc. We are just being a little careful.

That's why our credit standards, we have raised the bar on the SME side a little bit right now. This can change again once the disruption starts taking away.

At least for this year, we have decided we'll be careful on SME, also because we had some slippages in SME this quarter, which we know that it will come back. Again, we'll have the same Q3, Q4 story of last year where some slippages happened in Q3 and Q4 again it got upgraded.

Similar thing will happen this year also, either in Q2 or Q3 it will get upgraded. We're fairly confident of that.

Given that, there has been some impact on the yields on the SME. It's a function of both incremental businesses are getting booked at slightly lower yields, because we're taking much lesser risk, and secondly, some slippages, which is only kind of a transient kind of a slippage has impacted, and hence, it should get better next quarter on that margin.

Got it. ECLGS how much have

I'm really sorry, Puneet, would you mind coming back in the queue?

We

have other participants. Sure, sure, sure.

Yeah.

Thank you. Thank you so much, Puneet.

We'll take our next question now from Parag Jariwala of WhiteOak. Parag, please go ahead.

Pralay, can you hear me? Hi Parag.

Hi. See, I got the explanation which you have given to the previous question about the yield and margins.

If I just look at the quarter-on-quarter movement in the loan portfolio, your gold, SME, and retail has been declining, and I got a detailed reply of ₹2,000 crore which you have given there. Even if I look at gold and SME, they have grown at around 2%-odd-ish percent put together right?

Most of the growth has come in from the corporate side, which is around 6% quarter-on-quarter. Now, Pralay, what I want to ask you is that since we are bulk deposit dependent to an extent, right?

Ideally, we have borrowed in a wholesale and given a corporate loan, right? Wouldn't this kind of create a pressure on the margins?

If yes, we can give up this kind of a business and maintain the profitability. What were your thought process there?

That is the first question I have.

Yeah.

Second is on the asset quality. Look, how should we think about slippages and upgradation, because it has been quite volatile.

Because in first quarter, we saw around ₹140-odd crores first quarter last year. Then we kind of recovered a bit in second quarter, and in third quarter, we saw around ₹200 crores, we recovered a bit in fourth quarter.

Now, this quarter also, as you mentioned, that there are some slippages on the SME side. Reason I'm asking, Pralay, this is not stabilizing, and remains quite volatile and difficult to predict and difficult to gauge that what's happening there.

If you can give some comfort on that side, that would also be helpful. These are my two questions.

Thank you.

Absolutely, Parag. Thank you.

On your first question, it's pretty clear. Your question is that can you fund a wholesale asset book with wholesale funding?

That's a question.

Yeah.

The answer to that is that as long as we can keep the NIM within our guided lines, which is somewhere around 3.75 is our guided lines, somewhere around that We can be a little lower at some times, we can be a little higher at times, but for the whole year, our guided line is 3.75. As long as we can manage our ROA somewhere around 1.3 to 1.5.

Now I know we are lower than that this quarter, but we'll make it up for sure, because the same thing we did it last year as well. That's how our trajectory of the bank is for the last few years.

Then, by doing this, we're creating a wholesale franchise, because here we're not doing tactical business in wholesale. The way the teams has been built, the way the structures has been built in terms of large corporates, commercial banking/mid-corporates, financial markets, we are diversifying the risk.

Now financial markets has come down around one-third of the whole portfolio. There used to be a time when it used to be 70% of the portfolio.

All that, we are doing it by distributing the risk and building the future franchise. We are in the franchise-building mode on the corporate side.

Given that, very clearly the target to Manish Modi, who's our head of wholesale, is that eventually he has to deliver the both ROA as well as RAROC. RAROC by itself doesn't mean everything, but combination of ROA and RAROC will help us in building a good quality.

If you look at it, the amount of investments both in terms of people and in terms of technology which you're putting in transaction banking is primarily to derive this ROA and RAROC from the wholesale banking relationships. One thing I don't know whether we have disclosed or not, but last year in our growth, there has been significant contribution on the liability side from wholesale side as well.

That's one thing, and their cost of funds is in line with retail cost of funds, maybe 15 bps here and there. Given that, that is a fast indication that we are building just not opportunistic asset book, because that has no meaning.

I completely agree with you, it has no meaning. When you are building a franchise, when you are starting with liability, we are starting to build non-funded business, that is also grown well.

When you are starting to build a transaction banking franchise, our products at least to start with and capability, then we're building a proper wholesale franchise, and there are investments to be made. If at all in retail we have to make investments in manpower, operating cost, and all that, in wholesale, we have to make investment in terms of little compressed NIM for that franchise for some time, as long as they're able to in the long term deliver ROA.

That's the thought process behind building the wholesale bank. We will be able to manage this till the time our gold mix is somewhere between 45% to 50% or so.

We have calibrated it in our mind very clearly. As and when the gold mix starts coming below 45%, then each of these businesses has to stand on their own feet.

Then We already monitor, I'm saying that we'll start demanding the ROA from each of these respective business, and that kind of a time is given to every business to build their franchise. That's the thought process on the wholesale side.

On the headline item, I'm saying again that so far, I don't see a risk to our guidance on the NIM on a full-year basis of 3.75, and I don't see too much of a risk on our ROA guidance of 1.3 to 1.5 in that range. As long as we can do that, and then build a franchise on the wholesale side, and then eventually build a franchise on the retail side for which the systems are now in place.

Huge investments have gone into technology in the last one or two years, and now we have to fructify and leverage that investment into building a franchise, leading to a better ROA in future. We are on the right path.

We got delayed on the technology for some time, I have discussed with you why, how, etc., but now we are firmly on track. That's your first question.

Hmm. The second question was

About the asset quality. Ha, ha,

asset quality fluctuations. What has happened is this quarter, we had a slippage of around 90, I don't exactly remember the number, ₹96 crores or something like that.

Last quarter was around 60-something, but this 96 is much lower than what it was in Q3 of

last year.

That's the point you are making that how do you make it out. This is happening because the portfolio is small.

This is not happening in wholesale, by the way. This is to some extent happening in BLG or SME to some extent.

That's the reason we have turned cautious a little bit, because the environment we deal in BLG, but the good part is a lot of this is not moving into eventual losses, because we don't do any unsecured business. That's the reason the fluctuation, because we had a slippage in Q3 and we had a upgrade of some ₹80 crores or something like that in Q4, okay?

Again I'm saying, whatever slippages we have seen in BLG this quarter, some fair bit of this will come back in Q2 only, and some part will come in the Q3 back, because these are not bad businesses, these are well-collateralized, and hence, they're going through a cycle because of various issues in the ecosystem. We don't manage our books.

We just try to say that whatever happens happens, no unsecured loan in BLG, and hence, we're able to upgrade those customers as and when this happens. You will see in Q2 and Q3, you'll see things have changed again.

Yes, there has been little bit of a volatility, and it has never happened before. This year is happening primarily I think it's because of the environmental challenge.

Now you can say that other banks are not facing it, I don't know, but maybe in the markets we are seeing, we are seeing a cash flow issue or supply chain issue or some demand issues there for those customers, and hence, we are doing what we have to do. Eventually, these are not going into losses.

Sure. Sure.

Sorry, just one question if I can chip in. See, this year, sorry, this quarter, we are somewhere near to 1% kind of an ROA.

This 1.3 to 1.5, should we consider that as, more a normalized and a long term which can be achieved in '28, '29, or you think in '27 also you would be?

No, in '27 itself we'll touch 1.3, okay?

Okay.

If you look at last year's trajectory, also similar trajectory. Okay?

There is no reason for me to believe that we can't do it this year, because I think we're better placed this year, a more balanced kind of a franchise with not all, but more cylinders firing, okay? I don't see a risk for 1.3 ROA to be conservative, and don't see too much into this quarter's ROA, because last quarter ROA in the same quarter is even lower than this.

Yeah. No, get it.

Sure, Pralay. Thank you and all the best.

Thank you, Parag. Thank you.

Parag, do you have any more questions?

No, I'm done. Thank you.

All right. Thank you.

We'll take our next question from Somil Shah of Paras Investments. Somil, please unmute your microphone and go ahead, please.

Am I audible?

Yes.

Okay. I wanted to know why other income has gone down considerably in this quarter?

Yeah. It has always been a strong point for us, other income, but there are three reasons, because last year Do we disclose treasury income separately?

Yes,

to investors? Yes.

Whatever it is. Let me, without giving numbers, let me tell you that for Q1, we had a substantial treasury gain in Q1, and this year we have almost negligible treasury gain in Q1.

We must have disclosed these numbers last year. This is a investment 0.6.

We had ₹53 crores of treasury gain last year in Q1, and this year we have got ₹3 crores, I think, treasury gain this year, okay? From that perspective, it is obvious.

Second is that on insurance, because of various noise in the system, etc., etc., and there are various things which we read and we also know that RBI Governor himself is looking into complaints of customers and things like that, we took a step back on our insurance, and we put a lot of things in place. Hence in CPGRMS, for example, which is the DFS, we got six out of eight times, five or six times out of eight times, we have got the best service complaints management award.

We are proactively taking these actions so that we are not on the wrong sides of this mis-selling and compliance, etc. Our board is very firmly focused on that.

We put several measures. Because of that, the insurance business actually did lesser than what we did last year same quarter.

That's only a corrective measure. Now it will start picking up, because now that things have stabilized, what we have taken measures, we took fairly tough measures on that to ensure there are no probable mis-selling in the branches of the banks.

These are the two main reasons why our fee income has sort of come down. There's a third reason, which is if you look at the disbursement numbers which we share with you, on the gold loan side, as well as the loan against share gold loan, which is the LAS, in both places, because that we don't show separately, but in retail, you see disbursement have significantly come down.

What has come down in disbursement in retail is primarily LAS, which is against gold, and in normal gold business also, disbursements has come down year-on-year slightly and quarter-on-quarter significantly. With disbursement, processing fee comes down.

Because we are implementing a lot of regulatory and other things, etc., in the gold loan business, for example, end-use monitoring, other things, etc. Any transition takes little time.

It will pick up again next quarter onwards, but this quarter we have been very cautious and careful. That's why the disbursements has been little low on gold and gold-related retail products.

These are the three reasons why processing fee, insurance fee, and treasury, which we have no hand in it, but it happens naturally based on cycles, all three. That's why our overall fee has come down to around 12%, 13% of overall income, where our kind of a guidance is we will be somewhere around 16%, 17% or so.

We have lost around 5% primarily, but most of it will come back because at some point of time, treasury will also make money, hopefully, in the year, and core fees also will make some money on insurance, because Q2 onwards we'll see the insurance pick up, and gold disbursement also will start picking up. Between all these three, I think fee income around 15%, 16% will be there, and for the full year, we'll try to come back to around 17%.

On the treasury, sir, why there was so much of fluctuation? Last Q1, you said ₹3 crores, and now it is ₹53 crores.

₹53 to ₹3 crores.

Because this year we didn't book any profits, because it's a question of a call that do you want to make short profits when yields have gone down marginally, or you want to keep it for future is a call which you have to take. We took a little conservative call and said that we're not rushed for this, let's wait, because we have a much larger AFS book than the HTM book at this point of time.

Because that one opportunity got, we put a lot of money in the AFS. We have ability to book that profit as and when situation stabilizes.

No rush. If it happens this year, fine.

If it doesn't happen this year, the bank will look at next year. No point making small profits and feeling good about it.

That's the reason that last year we had an opportunity to make large profit, and then we banged that and made that profit that year. That's a kind of a call which we took.

Okay. On the ROA front, if I'm not wrong, earlier calls we were saying that we should be closer to 1.5 ROA for FY27.

Now I think I heard to the previous participant, you said around 1.3. Are we revising our guidance or?

No. I said that we are between 1.

Because Parag was asking me that ROA is at 1. 1.03, 1.0, somewhere around that.

Will you take it to 1.3? That's what I was responding.

Our internal objective is still ROA of 1.5%. That is internal target.

I'm saying that we will not go below 1.3 for this year under any circumstances. That's the point.

These are different response for different question.

Because from here to reach an 1.5 ROA for a full-year basis, I think gradually by Q4 we need to exceed 1.5, then only the average comes. Yeah.

Of course, I understand that, yes.

Okay. We see no issues with that as of now?

No, I said we'll be between 1.3 to 1.5. Okay.

Sir, just one question on our promoter entity, if I may ask. Our promoter entity, Fairfax, has been emerged as a frontrunner for IDBI Bank stake sale.

Just wanted to know what is the management's thought process on this, because will we be running as an independent bank or if you could give some sense on this, what happens to CSB Bank post this acquisition?

This is something which Fairfax has to answer, not me, because CSB has never got into any conversation, negotiation, discussion on this point. Having said that, I've asked this question to Fairfax, and they have said, "Please continue with business as usual.

Nothing changes for you." We will continue to do what we're doing as usual.

For example, when you're doing a tech transformation, these conversations, by the way, is going on for the last five, six years, right, with Fairfax. Just a simple thing.

We asked them that at that point of time also when we're doing that tech transformation that IDBI is Infosys, should we take Infosys or Oracle? Finally, we took Oracle, okay?

Fairfax has left the decision to the management to decide how to run the bank, okay? We are not on the deal street, we are business guys, we know how to run business.

We have been told to run business. That's all I know.

Thanks for detailed answers. That's it from my side.

Thank you and all the best.

Thank you so much, Somil.

Thank you, Somil. We have Vibhor Talreja of Nvest Amplifier.

Vibhor, please unmute your microphone and go ahead with your question.

Hi, am I audible?

Yes, Vibhor.

Yeah. Hey, hi, Pralay.

Hope all well. Congratulations for completing six years.

Thank you.

Pralay, look, the questions is not based on quarterly, but more on a long-term. See, the idea was some of us have invested behind you when you joined Catholic Syrian Bank, but at the end of six years, when I see, there has been a growth on the gold loan side, and there it's partly a lot due to the significant increase in gold loan prices.

Whether it is retail assets or retail liabilities, nothing much really happened in a larger six years' time period, at least in line with the expectations or the initial guidance. Now I hear you that you wanted to first build the retail liabilities, but even the wholesale book still continues, the retail assets did not grow, and even now, at least the feel I'm getting is that this is going to be a very slow grind while we have invested in technology over the last two years, which got a bit delayed.

If you can, and I'm sure as management we have been at it and every time we speak, there is a massive clarity of how we are doing things. It would be good to understand where the focus has been and what changes, because as a shareholder, it has been a fairly longer period and not much visible, except the continued good growth in gold loan along with good asset quality and so on and so forth.

Beyond that, from numbers output, it is not visible. I'm sure a lot more has gone into it, would like to understand from you how should we think about it?

Thanks, Vibhor, for your question. It's a very important and strategic question, let me try to respond suitably.

Let me take a step back and say what we said, okay? When we looked at the whole thing, we created a vision of SBS 2030.

We clearly defined the period and said that we'll sustain what is good in the bank. On the business side, one of the things which was very good is understanding of the gold loan business, okay?

We have continued to sustain that, and sustain is a continuous period. Just doing gold loan, you need a NBFC, you don't need a bank.

We said that, how do we build a bank? We said that we have to build a bank.

Next stage, once you have stabilized and sustained the bank, is to build the bank, okay? When you're building the bank, we decided we'll have five pillars: governance, human capital, [unclear], and technology, customer service, and compliance.

When you look at these five pillars, how we have fared on them. On governance, we have done extremely well.

On compliance, we have done extremely well, okay? On human capital, we have done extremely well in terms of the quality of leadership across all verticals, the culture which we have built, which is a part of the second pillar, we have done extremely well.

Technology is delayed because of some specific reason which I have discussed one-on-one with various large investors. It got delayed because of some decisions got delayed, but eventually when it was decided, we did it at a breakneck speed with 50-to-surround system, another 10 surround 8 surround system within the CBS, with transaction banking, with ServiceNow, with everything together.

We have to understand that bank didn't have much of a technology platform, data centers. Everything was for a very small niche kind of an organization.

We had to break and rebuild everything. Now, banks do take time to build a long-term franchise.

Just doing business retail assets, I know how to do retail assets business, appointing people and getting business done, but that's a NBFC model, that's not what we wanted to do. Given that, look at the execution part, that once we got our kind of approval to go ahead with the technology part and the thing is implemented in quickest time possible.

Now we said that scale phase will start from FY27 to FY30. While I'm giving these reasons what was decided, and broadly except for the technology got delayed by two years, two and a half years, and that too was a decision point, was not a execution point, almost everything else we achieved the way I had told, we had given guidance to the markets.

While we are here, let's not also miss the point that almost every year we have delivered, okay? Now, sometimes you deliver as a franchise, sometimes you deliver tactically.

What you're saying is absolutely correct that so far we have played a tactical game to build a long-term franchise. Tactical game is not to just pass one year, and next year again build a tactics.

The whole strategy play has remained over the last thing, and it is only going to strengthen in the next three, four years, and you will see results. The tactical play is that if we cannot fund this, because we are a listed bank, I cannot say that wait, give me three years, I'll build it, and then we'll do it.

Every quarter I have to perform, and one quarter one ROA going down by 10 basis point, 20 basis points, rightfully I'll be questioned, okay? Given that, I have to have a tactical play to ensure we manage cost, we manage NIM, so many parameters has to be managed.

In between, funding challenges came because we are not a great CASA franchise. All that we have navigated in difficult periods, and almost every quarter, every year, we have delivered a reasonable profit and reasonable growth on the balance sheet side.

We focused more on balance sheet growth. I had no reason to say that we get somebody like Manish and his team and build a wholesale franchise if you are not building a long-term, good quality bank, okay?

That's the reason But retail, the only thing is I have done retail all my life, I know too well when to press the pedal. Because if you press the pedal too fast, you will meet an accident, especially in an environment like this.

I chose not to go to DSAs, not to go to partnerships, not to create digital partnerships and all this, because in the end, in my view, this can lead to challenges if it is not completely owned and managed by us. We're doing the traditional way that build the machine first, then build the customers, build the franchise, then cross-sell, then build retail, because then that becomes sustainable compounding growth story.

Hence, by 2030, still we have FY27, FY28, FY29, FY30. I've always said that last four years, last three to four years is the most critical.

Why? Because on a larger base, we'll show the growth.

That will not be relevant on a smaller base what we did, how we did it. I think we're firmly on track on the execution story.

Yes, we're only one place we fell short, which is taking the decision on the technology, which got delayed by two and a half years. Other than that, we have executed everything while we have delivered every quarter, not every quarter, every quarter we can't deliver, but every year we have reasonably delivered on the top-line, and most of the key ratios has been sustained within reasonable guidance.

That's all I can say. Rest is we have to wait and watch how the execution happens.

Vibhor, do you have any more questions now?

I think he's dropped out or is he? No, he's there.

No, I'm here. I said thank you and all the very best, Pralay.

Oh, we couldn't hear you. Sorry, Vibhor.

Thank you very much.

My apologies.

Thank you so much, Vibhor. We have our next question coming in from Jeevananth Manivasagam.

He is an individual investor. I think he is no longer raising his hand.

We will go with Piyush Singh of CT Family.

Am I audible?

Yes, please.

My question was in the lines that I think a couple of quarters back, I think you already answered on return ratios. Do we still stick to our Laxman Rekha of 15% of ROE that we mentioned a lot of times in last year and last to last year?

Piyush, you have any other questions or this is it?

I think mostly this question. I think others have already asked.

Thank you. Piyush, broadly last year we started with 10% ROE and we ended somewhere around 14%, I think, 14.26% or something like that, if my memory serves me correct.

This year we have started with slightly around 12%. As you see that I'm saying trajectory will be moving up, ROE trajectory will move up.

We'd like to see ourselves ending the year slightly better than last year. Last year we ended at 14.2 or something like that.

This year, we'll try to touch the Laxman Rekha if we can execute it right.

Got it. That was the only question.

Thanks.

Thank you, Piyush. We have our previous individual investor, Jeevananth Manivasagam.

Jeevananth, would you like to go ahead and ask your question now?

Hello. Am I audible, sir?

Yes.

Yes, Jeevananth,

please.

Sir. Good evening, sir.

May I know the reason why there is a drastic fall in disbursement this quarter? Is that a conscious call or anything specific, sir?

Disbursement.

This I explained, sir, in the beginning,

but

I'll just quickly repeat it. Disbursement has gone up in wholesale, disbursement has remained similar in our SME business.

Only two businesses where disbursement have gone down, and both are linked to gold. In retail where disbursement has gone down primarily is something called loan against security product where the collateral is gold.

This is the re-pledger business which RBI effectively said from 1st of April, FY27, this business cannot be done. Because this guidance was given sometime back, we had started reduction on this business, and hence, that is showing up now in this quarter.

That portfolio, which used to be ₹2,100 crores portfolio, has now become ₹60 crores. Effectively, it will get zeroized.

That is how the retail disbursement have gone down. The reason the gold disbursement has gone down is that there are two, three reasons.

One is that there are a lot of regulatory implementations we had to do this quarter. To give you a one or two examples, there are many, but I'm just giving one or two: how do you do end-use monitoring, how do you document.

There are a lot of inputs and guidances which came, and we are busy implementing those on the ground. Some of these things takes time.

Now we're ready with it more or less, things are going to smooth an hour a little bit more. That is one of the reasons.

The second reason also is, obviously, when gold loan prices don't go up anymore and it starts coming down, some of the top-ups, or some of the customers what they do is, they close the loan and take a higher loan, and that is taken as a disbursement. For example, it is never possible that if you look at last quarter, our gold loan book was somewhere around ₹21,000 crores, and disbursement was

some ₹14,000

₹15,000 crores or something.

₹16,000 crores

last quarter. Now, ₹16,000 crores of disbursement cannot lead to a book of ₹21,000.

Obviously, a lot of those renewals or top-ups happens with a slightly higher value, and hence, they close and open those loans again with a slightly higher value. When the price starts coming down, they don't have motivation to do that.

That's why they are not shown as a disbursement. That does not mean that the portfolio is coming down.

It's just that the portfolio remains where it is. If the price had gone up, then what you would have done is, suppose you had ₹100 of gold loan, you would have taken out that gold loan and booked it at ₹120, and ₹120 would have shown for disbursement.

Right now, that 100 will remain as portfolio in this thing. That's another technical reasons why this has happened.

As gold price starts going up, you will see disbursements going up again. Disbursements going up do not necessarily build the portfolio by the value of the disbursement.

It only takes the value up by the incremental quantity of the disbursement. Processing fee is on the total disbursement, and when customer is getting a higher loan, is doesn't mind paying a processing fee on the whole amount.

That's one of the reasons why I said our processing fee has been a little down this quarter primarily because of this disbursement on the gold loan and insurance and treasury income, all three I said. These are transient, and I'm very confident that through the year, things will start getting better on this one, both on regulatory implementation, execution capability, and hopefully the cycle.

Jeevananth, do you have any follow-up or Jeevananth, can you hear us?

He's on mute actually.

Yes. Jeevananth, can you unmute your microphone?

Do you have any follow-up question?

Yes, sir. I have one more question.

Right now, our share of unsecured loan in the overall AUM is around 2%. Is there any plan to increase it further, sir?

Sir, you're very right that right now our overall bank's unsecured retail of overall bank's book is only 2%. This includes personal loan, credit cards, and other unsecured loans.

We obviously understand that yields are much higher in unsecured business than a secured business. Right now, we are managing risk because our liability franchise, customer additions, etc., we are starting to work on that.

The day we have that franchise in place, then we will go all out on our unsecured business. That is still a year away, at least a year away.

Given that, we'll still remain a little risk-averse. Also, I don't think the cycle is fully over on the unsecured side of the business, especially we are hearing challenges on jobs, some of the sectors having issues because of the AI and other things, etc.

A lot of the people who takes this personal loans and unsecured loans and all this are in some of these sectors. A player who's already firmly placed in that segment will continue to do well, but no point entering a zone which is a little bit challenging at this point of time, especially because our liability franchise is still growing.

Given that, we have said that unsecured business is something we'll start focusing on only FY28 onwards, not in FY27.

Sir. Thank you, sir.

That's all from my side. Thank you.

Thank you, sir. Thank you.

Thank you so much. Requesting participants, if you wish to ask any questions, please click on the raise hand icon that you see on the participants tab on your screen at the bottom of the screen.

We'll take a follow-up question right now from Puneet Balani of Daulat. Puneet, would you like to go ahead?

We cannot hear you, Puneet.

Was growing corporate but soft on gold loan, are growth guidance of 20%-plus is intact or 25%? What would that be?

Second thing, how much have we done in ECLGS? Sanctions and disbursements, yeah.

On your first question, because there's some voice issue, I could not fully understand, but let me guess the question. Right now, wholesale business is somewhere around 24% or so of the book.

We want to take it to around 32% by FY30. Gold loan, which is somewhere around 54%, will also reach the similar level by FY30.

Wholesale and gold loan will be similar in FY30. But

My question was, sir, on the growth guidance. Is it 25%-plus, or what are we targeting?

Oh, growth guidance. Growth guidance, okay.

Got it.

Wholesale will continue to grow the way it is growing at this point of time, which is somewhere between 35% to 40%. Gold, I think we should grow around similar levels of around 30 to We should be growing around 30% to 35%, somewhere in that range, okay?

The question here is that how do we come to a 50% mix from a 54% mix if we don't grow the other businesses. That is something we have to solve.

We are working on it.

Got it. ECLGS how much disbursements have you done?

ECLGS, we have done around ₹60 crores. We are not aggressively marketing it.

If customers are coming and asking for it, we are reviewing it, and we are doing it. We have done around ₹60-odd, ₹50-₹60 crores.

Got it.

Got it. Sir, gold loan LTVs, your LTVs are at 75% versus other banks are below 65 or so when I compare the peers like Karur or City Union.

What's the reason here, sir? Is there anything specific you could attribute to that?

Yeah. Our agri book is slightly higher, because on our agri book, what happens is, you can go up to 85%, okay, easily.

Agri has one more advantage is that you have PSL income against it, okay? That's why and we have been doing this business for many years.

We navigated a very challenging period when LTV was brought down from 90% to 75%, I think somewhere around '23. We are pretty confident of our ability how to navigate this even in a crisis situation which happened in '23.

We didn't lose much money then also. We know the process, our people have the experience how to do it, etc., and we have only improved from there.

Given that, we have been doing it. However, as per board guidance, now we are going to gradually bring down the agri portfolio, and automatically as the mix changes, LTV will change, because our non-gold portfolio LTV is somewhere between 50% to 55% right now, okay?

The regulatory framework, if it is 75, on that, we are still 15%, 20% lesser than what the regulatory framework is. If we are able to change the mix little bit here and there, and we have just launched a product, the end-generating product or something like that we are calling it, which is more targeted towards people who are going to take loan and use it for earning, which is a kind of a pseudo-SME kind of a business.

Those products we are launching now because we have the systems now to do it. Given that, I think gradually we will have a glide path of the agri gold loan coming down, and once it comes down, naturally as a mix, without changing any LTV in agri or normal, it will start coming down over a period of time.

That's the real reason, and we are already working on it.

Got it, sir. Thank you.

Thank you, sir.

Thank you so much, Puneet. Ladies and gentlemen, that was the last question for today.

On behalf of CSB Bank Limited, that concludes today's conference call. Thank you everyone for joining us, and you can now click on the leave icon to exit the meeting.

Thank you very much, everybody, and thank you for joining the call, and look forward to seeing you again next quarter. Thank you very much.

Thank you, everyone.