EconomyBanking
Central Bank of India's profit rises 21% as corporate lending surges 42%
The state-run lender earned ₹1,469 crore in the September quarter on strong interest income and cleaner books, though higher provisions and weaker treasury gains held back the bottom line.
Key points
- Central Bank of India's net profit rose 21.1% to ₹1,469 crore in July-September.
- Net interest income grew 26.3% to ₹4,146 crore as advances rose almost 30%.
- Gross bad loans fell to 2.39% of the book, from 3.01% a year earlier.
Central Bank of India reported a 21% rise in quarterly profit on Saturday, as strong growth in lending pushed up its interest income and its stock of bad loans continued to shrink.
The Mumbai-based state-run lender’s net profit for July-September was ₹1,469 crore, up from ₹1,213 crore a year earlier and ₹1,324 crore in the April-June quarter. Profit for the first half of the financial year rose 17.25% to ₹2,793 crore.
Net interest income, the difference between what the bank earns on loans and pays on deposits, rose 26.3% to ₹4,146 crore. The net interest margin widened to 3.01% from 2.89%, helped by a 28 basis point fall in the cost of deposits to 4.60%. Operating profit climbed 27% to ₹2,268 crore.
A lending push led by companies
The bank’s loan book is growing much faster than its deposits. Global advances rose 29.83% to ₹3.81 lakh crore, while deposits grew 14.41% to ₹5.09 lakh crore. Corporate loans led the way, jumping 42.05% to ₹1.19 lakh crore. Retail, agriculture and small-business loans grew 21.11% to ₹2.54 lakh crore, with retail loans up 24.49%.
That has lifted the credit-deposit ratio to 75.02% from 66.20% a year ago. The share of low-cost current and savings accounts fell 2.18 percentage points to 44.65%.
Cleaner books, bigger provisions
Asset quality continued to improve. Gross non-performing assets fell to 2.39% of loans from 2.60% in June and 3.01% a year ago, and net NPAs to 0.31%. Fresh slippages, or loans newly turning bad, fell to ₹734 crore from ₹939 crore in the previous quarter. The bank has set aside money against 97.16% of its bad loans.
Provisions still rose. Total provisions and contingencies, including tax, were ₹799 crore against ₹573 crore a year earlier. Provisions for bad loans rose to ₹490 crore from ₹143 crore, and for standard assets to ₹379 crore from ₹30 crore, partly offset by a write-back of ₹336 crore on investments.
Other income was weaker. Non-interest income fell 6.06% to ₹1,380 crore, with treasury income down 31.2% to ₹128 crore and an ₹87 crore loss on revaluing investments. Fee income rose 3.9%.
The bank’s costs grew more slowly than its income, bringing the cost-to-income ratio down to 58.95% from 62.42%. Capital adequacy stood at 17.68%, with core equity at 15.97%.
The results were the latest in a run of public sector bank numbers. IDBI Bank, also on Saturday, reported a 39% fall in profit on a high base. Central Bank of India’s shares will react on Monday.