CSB Bank delivered a strong operational performance in the December quarter and expects the asset quality to improve over the next two quarters, Managing Director and Chief Executive Pralay Mondal tells Kshipra Petkar in an interview. Excerpts:
How should one look at the Q3?
Overall, it was a decent quarter. Most operating parameters improved sequentially. Core fee income grew despite the absence of treasury- and priority sector lending-related income. The only concern was higher slippages, which were largely technical in nature and not reflective of a trend.
What is the guidance on the asset quality?
Our long-term guidance is to keep gross non-performing asset (NPA) below 2%, net NPA below 1% and credit cost around 50 basis points. We are confident that we will remain within these thresholds and should see improvement in Q4FY26 and Q1FY27.
The guidance on loan and deposit growth?
We expect to see loan growth at around 25% and deposits around 20%.
How do you see net interest margins (NIMs) going forward?
We guided the NIM in the 3.7–3.9% range, and remain confident of staying within the band. Deposit costs are not easing anymore while yields are marginally softening due to marginal cost of funds-based lending rate transmission. This limits upside, but the range remains intact.
Liquidity conditions are tight across the system. How comfortable are you?
We remain comfortable given our funding profile. Our average LCR was 114% in Q3FY26 and we do not intend to let it fall below 110%.
What is your comfort level on the credit-deposit ratio?
In Q3, it moved higher (91.85%) due to system-wide conditions. We are comfortable in the 85–90% range.
How do you see the mix in advances evolving?
Wholesale may inch up from the current share of 24% while gold loans will remain at current levels. Small and medium enterprises is a long-term growth engine for us, and we expect growth to return in this segment from FY27.