Fairfax Completes Investment in Catholic Syrian Bank

Company’s Overview

1. The Catholic Syrian Bank Limited is an Indian private sector bank with its headquarters at Thrissur, Kerala, India
2. It is one of the oldest bank in India which commenced business on January 1st, 1921 with an authorized capital of Rs.5 lakhs and a paid up capital of Rs. 45270/.
3. The Catholic Syrian Bank provide loans to following Sector: Retail Asset Portfolio

Under this portfolio company distributes Gold loans and Non-gold loans.

In FY17-18, Retail asset portfolio comprises of gold loan of 2,477 crore and retail loans (non-gold) of 1,603 crore. During the year, gold loan book has grown by 22% from 2,025 crore as on 31st March 2017 to 2477 crore as on 31st March 2018. The non-gold retail portfolio growth is almost flat and stood at 1603 crore as on 31st March 2018 compared to 1626 crore as on 31st March 2017.

Fairfax on it’s Investment in Catholic Syrian Bank

SME Lending:

Bank plays an important role in supporting the Small and Medium Enterprise (SME) Business across the geographies of India. SME Business portfolio stands at 3,693.6 crore as on March 31, 2018, equal to 36.86% of the Bank’s total advance. The Bank extends working capital, term loan, and trade finance and project finance facilities to SME for their various financial need.

Catholic Syrian Bank Limited (CSB) Pre IPO Shares Details

Face Value:

Rs. 10 Per Equity Share

Lot Size:

100 Shares

Current Pre IPO Shares Price:

Rs. 200 Per Equity Share

Priority Sector Lending:

Priority Sector Advance extended by the Bank stood at 3551.93 crore at the end of March 2018, constituting 42.96% of Adjusted Net Bank Credit.

This is against the mandated target of 40% prescribed by Reserve Bank of India. At present, the bank has a network of over 430 branches and more than 240 ATMs across India. The Bank also plans to open a number of branches in a phased manner.

Performance of the Bank in FY17-18

Indian Banking Environment

The performance of the banking sector remained sombre, Public Sector Banks in particular. The position of stressed assets coupled with the discovery of frauds and governance issues in the banks have made this year a challenging one for the whole banking industry. On a positive note, the Insolvency and Bankruptcy Code mechanism finally took shape this year which we expect to be a shot in the arm for the Banking Industry in resolving the prevalent NPA Crisis.

Financial Performance in FY17-18

(i) The growth in advances by 15 % taking the gross advances to above 10,000 crore.

(ii) The Credit Deposit Ratio improved to 63.6 % as on 31st March 2018 from 54.5 % as on 31st March 2017. Increase has been mainly in less risky advances (high rated corporate and gold loans), given the bank’s low risk appetite in the face of low capital base.

(iii) This is reflected in the fact that the effective risk weight of advances of the bank has actually decreased from 53% as on 31.03.2017 to 49% as on 31.03.2018. Bank could effectively redeploy 1,200 crore of Treasury Assets to loans, increasing returns but not increasing commensurately the risks.

(iv) Bank’s deposits slightly de-grew on account of decrease in term deposits which was due to the conscious call taken by the Bank, to reduce high cost term deposits & improve low cost CASA accounts. Cost of deposits has been brought down from 6.90% in March 2017 to 6.15 % in March 2018. CASA of the Bank improved by 276 crore to `3971 crore as on 31st March 2018 from 3695 crore in March 2017. Bank has improved its CASA ratio to 27.03 %, showing an increase of 225 bps from 24.78 %.

(v) Bank has also reduced wholesale deposits by 482 crore and wholesale deposits as a proportion of total deposits is only 4.5% now indicating very low concentration risk.

Read on https://www.planify.in/buy-catholic-syrian-bank-pre-ipo-shares/