The private lender reported a marginal uptick in net profit at Rs 120.55 crore for the quarter ended September 2022 on growth in net interest income. The bank had posted a net profit of Rs 118.57 crore in the year-ago period.
Following the update, shares of CSB Bank zoomed more than 8% to Rs 247.35 on Thursday, before trading at Rs 243.40 at 9.50 am. The scrip had settled at Rs 228.60 on Tuesday.
Total income rose to Rs 600.12 crore from Rs 555.64 crore in the same period a year ago, according to a regulatory filing by the bank.
The asset quality of the bank improved substantially as gross non-performing assets (NPAs) fell to 1.65% of gross advances by the end of September 2022 from 4.11% a year ago. Net NPAs too declined to 0.57% from 2.63%.
“CSB Bank continues to have industry-leading margins, strong return ratios and robust asset quality. With credit growth expectation of more than 20% and stable asset quality, we expect a re-rating,” said
Wealth Research.
Strong asset quality and gold loans drove credit growth. Other segments are expected to pick pace, it said, with a buy rating and a target price of Rs 340.
Another brokerage firm ICICIDirect Research, which maintained a buy rating on the stock with a target price of Rs 275 on the counter, said the lender reported a steady performance but treasury losses played spoilsport.
“CSB Bank has given flattish returns in the past two years post the initial run-up. The management’s focus on sustainable and quality loan growth with control on credit cost to drive profitability,” it said.
PSLC income likely in H2FY23 will boost other income and earnings in FY23E and Investment in branches, employees and technology to keep opex elevated in the near term, though benefits to accrue gradually, it added.
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