Central Bank of India Q1 net profit rises 5.7% to Rs 203 crore

By: | Updated: August 9, 2015 9:17 AM

Public sector lender Central Bank of India on Saturday reported a net profit of Rs 203 crore in the June quarter of FY16, up 5.7% year-on-year (y-o-y) owing to a dip in provisions.

Public sector lender Central Bank of India on Saturday reported a net profit of Rs 203 crore in the June quarter of FY16, up 5.7% year-on-year (y-o-y) owing to a dip in provisions.

Net profit in Q1 was aided by a 12% y-o-y decrease in provisions made in the quarter at Rs 690 crore. Its bad loan provisions stood at R576 crore in Q1 and was R87 crore lower than the same quarter last year.

Central Bank’s net interest margins (NIMs) fell 13 basis points (bps) y-o-y to 2.74% and fell 14 bps sequentially.

RK Goyal, executive director at the bank, said the fall in NIM was a result of the recent cut in its base rate. “Another two quarters are needed for credit growth to be back on track and our focus is currently on the retail business which witnessed 17% y-o-y growth in Q1,” said Goyal, adding for FY16, the bank targets a credit growth of 9.8% and growth in deposits of 14.9%.

On the capital-raising front, the bank said it needs Rs 3,000 crore in FY16, part of which it expects to come from the government.

Gr1

Following the government’s infusion the bank will try to raise capital through a qualified institutional placement (QIP) of shares and has appointed SBI Capital Markets, ICICI Securities and IDBI Capital as merchant bankers for
the issue.

Asset quality of the bank deteriorated as it added R1,869 crore of bad loans in the quarter. As a percentage of gross advances, gross NPAs were at 6.70% up 61 bps from Q4 FY15. Net NPAs stood at Rs 7,448 crore, or 4% of net advances.

Central Bank of India made recoveries worth Rs 300 crore and sold bad loans worth R16 crore to asset reconstruction companies (ARCs) in Q1 FY16.

Total advances grew by 3.81% y-o-y to Rs 1.93 lakh crore but the corporate advances fell by 0.55% y-o-y to R98,955 crore.

However, the retail portfolio grew 17.25% y-o-y to Rs 33,470 crore, of which the housing portfolio grew 26.46% y-o-y to Rs 14,372 crore.

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