Private sector lender CSB Bank’s net interest margin (NIM), a key indicator of bank profitability, has bottomed out at 3.75 per cent in Q4FY25 and the lender is targeting to achieve 3.8-4 per cent NIM in FY26, MD & CEO Pralay Mondal told businessline.

“We have completely bottomed out now, it won’t get lower than this. Our NIM stands at 3.75 per cent right now, but next year NIM will start going up in later half of the year, in initial part it will remain little muted. So overall we will be somewhere between 3.8 and 4 per cent,” he said.

The bank’s net interest income was down 4 per cent year-on-year (y-o-y) in Q4 at ₹371 core, largely as cost of funds rose and as wholesale loan segment with slightly lower yield picked up, Mondal said. The lender’s overall advances grew 30 per cent on-year to ₹31,842 crore, while deposits were up 24 per cent y-o-y at ₹36,861 crore.

“Asset side there is no challenge for us, that momentum should continue…The challenge will always be on deposit side, how much we can fund and what we can fund is something that we need to see… This year we grew 30 per cent on assets and 24 per cent on deposits. We have to continue that momentum. I think we should be able to do around 20-25 per cent overall balance sheet growth, and then we will see how it pans out, it all depends on liabilities franchise is picking up,” he said.

Tech transformation

Mondal said the lender is in the final stages of technology transformation at the bank, which should get completed over the next six months period. Once completed, the bank will be able to raise granular deposits and launch more retail asset products, on par with modern banks.

“From that perspective, granular deposit franchise will start and we will invest significantly into people, distribution, process, products, retail assets…and then whole franchise will build up. All four assets (retail, SME, gold and wholesale) will do very well. Ultimately growth will be depend on liability growth…,” he said.

While the share of gold loans in overall advances will continue to be between 40 and 45 per cent in FY26, from FY27 onwards the share of gold loans would progressively moderate as share of other loan segments rise. The lender is also waiting for the final Reserve Bank of India (RBI) guidelines on gold loans, according to which it will finalise its gold loan growth strategy.

Published on May 2, 2025