Tag: corporate earnings

CSB Bank Q1 net rises 14%; asset quality deteriorates

Personal Finance

[ad_1]

Read More/Less


Net interest income of the lender is seen higher by 44.5% y-o-y at Rs 267.8 crore for Q1. (Picture courtesy: IE)

CSB Bank on Thursday reported a 14% year-on-year increase in its first quarter net profit to Rs 61 crore, even as bad loans surged in the gold loan portfolio. The Thrissur-based lender had reported a net profit of Rs 53.56 crore in Q1 of FY21 and a net profit of Rs 42.89 crore in the fourth quarter of the previous fiscal.

The asset quality of the lender deteriorated, with gross non-performing assets (NPA) as a percentage of gross advances standing at 4.88% for Q1FY22, from 2.68% in the preceding quarter and 3.51% in the year-ago period. Net NPA as a percentage of gross advances was at 3.21%, against 1.17 % in the preceding quarter and 1.74% in the first quarter of FY21.

CVR Rajendran, managing director and CEO, said the bank is confident of managing NPAs as the challenges are mainly from the gold segment where recovery is only a matter of time.

Fresh slippages in the quarter under review was seen at Rs 435 crore, of which Rs 337 crore was from gold loans. The gross NPA at the end of Q1 stood at Rs 686 crore, against Rs 401 crore in the year-ago period.

“COVID second wave, coupled with the LTV management of gold loans, did pose some challenges in the first quarter of FY 22. Lockdowns, alternate holidays, slowing down of the economic activity, controlled movements due to strict social distancing norms, lack of transport, etc restricted the customer access to branches, which in turn impacted both fresh pledges and releases. Thankfully, the worse seems to be over now and recoveries are happening in full swing,” he added.

Net interest income of the lender is seen higher by 44.5% y-o-y at Rs 267.8 crore for Q1. Provision coverage is seen lower at 70.20% as on June 31, 2021, compared with 81.73% in the year-ago period.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Why rising inflation impacts growth stocks

Personal Finance

[ad_1]

Read More/Less


Two school friends and veteran investors bumped into each other after decades in a coffee shop. As they sipped their cup, their ears perked up to a song ‘this is ourselves under pressure. Under Pressure.’

Veena: My portfolio has been under pressure recently. I was heavily invested in Nasdaq 100 funds, early stage technology and growth stocks and I thought they will continue to do well.

Ram: Some of them may do well in the long run, but in the short to medium term they will continue to remain under pressure if recently emerging concerns on inflation in the US persist.

Veena: Why should inflation or interest rates impact technology stocks.

Ram: Stock markets look to future earnings and discount it to net present value (NPV). When treasury yields move up on inflation concerns, your discounting rate increases and your NPV of earnings reduce.

Veena: Yes, but I still don’t understand why growth stocks should fall more than other stocks?

Ram: That is because the earnings of growth stocks are more back-end loaded. For example if you take a five-year period, most of the growth stock’s earnings may come only in the 4th and 5th year.Well-established companies which are likely to report consistent earnings..

Since the earnings are five years away, you need to discount it five times. When interest rates are low, it hence works in favour of growth stocks.

Veena: So, you mean when interest rates rise, the discounting rate increases and it impacts NPV of later year earnings?

Ram: Yes. Check this on excel. Assume discounting rate of 6 per cent and there are 2 companies A and B (growth) with same total earnings of ₹100 in 5 years, but A gives earnings of ₹20 for each of the 5 years, and B gives the earning of ₹100 only in the 5th year. NPV of A’s earnings is ₹84.25 and B’s is ₹74.73. Increase the rate to 8 per cent, A’s NPV is ₹79.85 and B’s, ₹68.06.

Veena: A’s NPV reduces by 5.2 per cent, while decline for B at 8.9 per cent due to the 2 per cent interest rate increase?

Ram: Bingo! Hence, growth stocks are under pressure.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,