CSB Bank Q1 Results Review - Overall Investment Thesis Remains Intact: Yes Securities

Yes Securities Report

CSB Bank Ltd.'s margin declined sequentially but most of the decline was due to change in accounting mandated by the RBI: Net interest margin was at 4.36%, down -68 bps QoQ and -104 bps YoY. An impact of 40 bps was due to change in regulation where penal interest has been moved to the fee income line.

The balance impact was due to higher slippages and higher cost of funds. The yield on advances in Q1 was at 11.25%, down by -52 bps QoQ but up 7 bps YoY. The cost of deposits in Q1 was at 5.95%, up by 22 bps QoQ and 95 bps YoY.

The management has maintained its NIM guidance of 4.5% to 4.8% for FY25.

What management implies was that the impact due to higher slippages would be nullified whereas, the penal interest impact is an optical accounting-driven change.

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