Central Bank of India Q3 Net profit surges 57%


 Public sector lender Central Bank of India on January 19 reported a net profit of Rs 717.9 crore for the October-December quarter of financial year 2023-24, posting an 56.7 percent rise from Rs 458.22 crore a year ago.


The bank's gross non-performing asset (NPA) stood at 4.50 percent, down from 8.85 percent recorded last year. On the other hand, net NPA for the quarter stood at 1.27 percent, improving from 2.09 percent on a year-on-year basis.


Central Bank of India's net interest income (NII) increased by 14.45 percent to Rs 9355 crore for 9 9-month period ended on December 31, 2023, over the corresponding period of last year.

However bank's Net Interest Margin (NIM) improved to 3.33 percent (6 bps, for 9 month period ended on December 31, 23, over the corresponding period of last year. Bank's total income (Interest Income plus Non-Interest Income) for Q3FY24 improved by 19.68 percent, from Rs 7636 crore in Q3FY23 to Rs 9139 crore in Q3FY24.

Central Bank of India has having pan India presence with network of 4494 branches with 65.29 percent (2934 branches) in rural & semi-urban areas, 4083 ATMs, and 11207 BC Points with total of 19784 Touch Points as of December 2023.


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This PSU Banks classified its loans of Rs 2,000 crore to Go First as NPA

 


Central Bank of India classified its loans to Go First as non-performing assets (NPAs) in the July-September quarter (second quarter, or Q2) of 2023-24 (FY24). The no-frills carrier has been under insolvency proceedings since May 2023 and ceased operating flights on May 3 this year.

The public sector lender’s exposure, including government-guaranteed emergency credit to the ailing airline, amounts to about Rs 2,000 crore.


Apart from Central Bank of India, another state-owned lender, Bank of Baroda, also has substantial exposure to Go First.


During an analyst call for Q2, Central Bank of India executives revealed that the bank had previously made provisions in the standard asset category for one big corporate account (Go First) due to anticipated issues (stress) in the future. With the corporate account now classified as NPA, the provision led to a write-back, resulting in a 100 per cent provision on that account.


In the April-June quarter of FY24, the bank paid tax on the provision (over Rs 600 crore) for this account, treating it as a standard asset. Now, with the provision amounting to nearly Rs 2,000 crore as an NPA, the bank experienced a write-back of Rs 43 crore, as disclosed by bank executives.


While the bank did not specify the exact extent of recovery expected from this account, executives stated that the account was sufficiently collateralised. They expressed confidence in the possibility of a successful recovery effort. Any recovery made will contribute to the bank’s bottom line, the executives said during the analyst call.


According to provisioning rules, this account is categorised as a sub-standard account, indicating that it has remained non-performing for less than or equal to 12 months.


Although the provisioning obligation for sub-standard accounts can be up to 25 per cent of the exposure, depending on the nature of the credit facility, Central Bank of India chose to make a full provision for airline accounts.


A bank executive said, “The bank aims to reduce net NPAs and improve overall asset quality profile, hence the provision made exceeds the requirement.”


Of the Rs 2,000 crore exposure, over Rs 600 crore is covered under the Emergency Credit Line Guarantee Scheme by the Government of India. The National Credit Guarantee Trustee Company, a government-owned entity, administers the scheme, providing emergency loan facilities to companies and micro, small and medium enterprises affected during the pandemic. The lender will file claims based on the prospects for resolution and recovery from proceedings under the Insolvency and Bankruptcy Code, 2016.


In recent developments, Naveen Jindal-led Jindal Power and Jettwings Airways, a Guwahati-based regional airline, have submitted expressions of interest for Go First.


Despite efforts by the resolution professional at Go First to revive the airline with limited flights, securing funding from lenders has proven challenging due to ongoing legal cases filed by the aircraft’s lessors.

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Central Bank of India Q2 results: Net profit jumps 90%

 


Public sector lender Central Bank of India on October 20, reported a net profit of Rs 605.4 crore for the July–September quarter of this fiscal year.


The bank's gross non-performing asset (GNPA) also improved to 4.62 percent from 4.95 percent Q1FY24. The lender's net NPA stood at 1.64 percent, improving from 1.75 percent in the last quarter.


Central Bank of India's total business grew by 11.51 percent to Rs 602284 crore (Q2FY24), vis-à-vis Rs 540130 (Q2FY23). However, total Deposits were up by 8.21 percent to Rs 371252 crore (Q2FY24), vis-à-vis Rs 343081 (Q2FY23).


Notably, the Provision Coverage Ratio (PCR) has improved to 92.54 (Q2FY24) from 89.20 (Q2FY23), registering an improvement of 334 bps.


The Operating Profit improved by 13.47 percent to Rs 3369 crore (as against, Rs 2969 crore Q2FY23), on half yearly basis, though it dipped marginally by 12.47 percent to Rs 1530 crore (as against, Rs 1748 crore Q2FY23), on quarterly basis, due to increasing in non-staff operating expenses.


Net Interest Income (NII) increased by 10.23 percent to Rs 3028 crore as against Rs 2747 crore Q2FY23. The same is increased by 26.90 percent to Rs 6204 crore (as against, Rs 4889 crore Q2FY23), on half yearly basis.


Net Interest Margin (NIM) improved to 3.53 percent as against 3.12 percent Q2FY23, 41 bps, on half yearly basis, though reduced marginally to 3.43 percent as against 3.44 percent Q2FY23, quarterly basis, due to increase in interest pay-out on deposits. Central Bank of India has a Bank network of 4489 branches with 65.22 percent (2928 branches) in rural & semi-urban areas, 4044 ATMs and 10962 BC Points with total 19495 Touch Points as on September ’23.

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Central Bank of India Q1 results: Net profit jumps

 


Public sector lender Central Bank of India on July 17 reported a net profit of Rs 418.4 crore for the April-June 2023 quarter, a jump from Rs 235 crore in the corresponding period last year.


The bank's gross non-performing asset (GNPA) also improved to 4.95 percent from 8.44 percent last year. The lender's net NPA stood at 1.75 percent, improving from 1.77 percent in the corresponding quarter last year. This is the on back of improvements in asset quality and increase in net interest margins of the bank.


The gross NPA of the bank in absolute terms fell to Rs 10,891 crore by end of June quarter, as against Rs 29,002 crore in the same quarter last year.


The net NPA, in absolute terms, stood at Rs 3,718 crore as on June 30, as compared to Rs 6,785 crore in the previous year.


The provision coverage ratio of the bank stood at 92.23 percent, which saw on improvement of 562 basis points on-year. One basis point is one hundredth of percentage point.


The net interest income (NII) grew by 48.27 percent to Rs 3,176 crore in Q1FY24 as against Rs 2,142 crore for Q1FY23, whereas, the total income (NII plus other Income) improved by 28.74 percent to Rs 8,184 crore from Rs 6,357 crore in the year-ago period.


The return on assets (ROA) improved to 0.43 percent during as against 0.27 percent in Q1FY23, and the return on equity (ROE) also improved to 1.63 percent for Q1FY24 as against 0.98 percent in the corresponding quarter of the last fiscal.


The total BASEL III Capital Adequacy Ratio improved to 14.42 percent in June 2023 as compared to 13.33 percent the same month last year. The Common Equity Tier 1 ratio came in at 12.13 percent in Q1FY24, registering an improvement of 109 bps.


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RBI imposes Rs 84.50 lakh penalty on this PSU Bank

 


RBI on Friday said it has imposed a penalty of Rs 84.50 lakh on Central Bank of India (the bank) for non-compliance with certain provisions of norms related to frauds classification and reporting. The Reserve Bank had conducted statutory inspection for supervisory evaluation of the bank with reference to its financial position as on March 31, 2021.


Examination of the reports revealed that the public sector lender had failed to report as fraud to RBI certain accounts within seven days of decision of Joint Lenders' Forum (JLF) to declare the accounts as fraud.


It had recovered SMS alert charges from its customers on flat basis rather than on actual usage basis.


The RBI had issued a notice to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions.


"After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty...," the central bank said.


RBI, however, added the penalty is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

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Central Bank of India Q4 results: Net profit jumps 84%

 


Central Bank of India on April 29 reported an 84 percent surge in its net profit at Rs 571 crore for the quarter ended March 31, 2023. The lender had posted a profit of Rs 310 crore in the year-ago period.


On a sequential basis, the lender's profit grew 25 percent.


The bank's net interest income (NII) increased 45.35 percent on Y-o-Y basis to Rs 3,513 crore in Q4FY23 as against Rs 2,417 crore for Q4FY22. The same is up by 6.94 percent on a sequential basis.


Moreover, Central Bank of India said that its operating profit has shown a growth of 16.27 percent to Rs 2,108 crore for the quarter under review from Rs 1,813 crore in the last fiscal. The operating profit on sequential basis has improved by 16.65 percent.


Central Bank of India's asset quality improved in the March quarter. The gross non-performing asset came improved 640 basis points to 8.44 percent (YoY) while its net non-performing asset improved 220 basis to 1.77 percent (YoY).


The bank's provision coverage ratio stood at 92.48 percent (YoY), with an improvement of 579 basis points.


Sequentially, the bank's gross NPA stood at 8.44 percent against 8.85 percent in December quarter and its net NPA came at 1.77 percent against 2.09 percent.


In banking segment, the digital transaction count also registered a growth of 37.39 percent, in internet banking, mobile banking, IMPS and UPI transactions during FY 2022-23, against corresponding period of FY 2021-22.



Further, the lender's business per employee increased to Rs 18.70 crore as against Rs 17.52 crore for the same period of preceding year

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Central Bank of India Q1 Result: Net profit rises 14.2 %

  


Central Bank of India on Monday reported a 14.2 per cent rise in standalone net profit at Rs 234.78 crore in first quarter ended June this fiscal on fall in bad loans, even as its expenses increased. The State-owned lender had posted a net profit of Rs 205.58 crore in the same quarter a year ago.


However, compared sequentially, the profit was down by 24.3 per cent from Rs 310.31 crore in the quarter ended March 2022.


Total income during April-June period of 2022-23 increased slightly at Rs 6,357.48 crore, as against Rs 6,299.63 crore in the same quarter of 2021-22, Central Bank of India said in a regulatory filing.


Total income was down from Rs 6,419.58 crore in the March 2022 quarter.


Bank's bad loans proportions remained high, but fell to 14.90 per cent of the gross advances by the end of June 30, 2022, as compared to 15.92 per cent in the year-ago period.


In value-terms, the gross NPAs were worth Rs 29,001.63 crore, up from Rs 27,891.70 crore by June 2021.


Net NPAs or bad loans were trimmed to 3.93 per cent (Rs 6,784.70 crore), from 5.09 per cent (Rs 7,904.03 crore).


However, bank's provisions (other than tax) and contingencies for Q1FY23 were kept higher at Rs 913.67 crore from Rs 610.64 crore put aside for June 2021 quarter. However, it fell quarter-on-quarter from Rs 1,061 crore for three months to March 2022.


On a consolidated basis, the bank's net profit grew by 17.6 per cent in the reported quarter to Rs 243.52 crore, from Rs 207.15 crore in the year-ago period.


Total income during Q1FY23 rose only marginally to Rs 6,387.24 crore, as against Rs 6,323.23 crore.

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Privatisation Of Bank: Two banks to be sold in the country, centre to speed up law change process

 


The Centre speed up the process of privatising two State-owned banks. News agency PTI quoted a source from the Centre as saying on Wednesday. The Modi government at the Centre had earlier amended the 'Banking Regulation Act' to pave the way for private investment in State-owned banks. According to sources, the Centre wants to pass a bill in this regard in the upcoming monsoon session of Parliament.

Union Finance Minister Nirmala Sitharaman had said last year that the Centre wants to start the process of privatising some state-owned banks. Therefore, the Bank Nationalization Acts of 1970 and 1980 will be amended and the Bank Control Act of 1949 will be amended. According to finance ministry sources, the process has begun. The government has also started preparing the draft of the 'Banking Regulation Act'. If all goes well, the amendment will be passed in the monsoon session. Of course, there is a good chance of the opposition being hindered. However, due to the majority, the government should not have any problem in passing this law.

The amendment has been passed in parliament and there will be no bar on the privatization of State-owned banks. Only then will the process of privatization of state-owned banks begin. Initially, two state-owned banks have also been listed for disinvestment. The name of which two banks will be privatised is yet to be announced by the Centre. According to sources, the Modi government initially chose four medium-sized banks for privatisation. The four banks that were placed in the initial list for privatisation are Bank of Maharashtra (BoM), Bank of India (BoI), Indian Overseas Bank(IOB) and Central Bank of India. Later, niti aayog proposed that most of the shares of Indian Overseas Bank and Central Bank of India be sold. The Modi government can go ahead with the NITI Aayog's proposal.

This is not the end of it, the government also wants to complete the privatization process of the tate-owned company BPCL quickly. Sources claim that only 52.3 per cent stake in BPCL held by the Centre will be sold. Earlier, the Modi government had taken the initiative to sell the shares of BPCL. Initially three companies showed interest in buying bpcl shares. But in the end, only one company survives in the race, the sources claim.


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Central Bank of India reports ₹310 cr net profit in Q4FY22

 


Central Bank of India reported a standalone net profit of ₹310 crore in the fourth quarter against a net loss of ₹1,349 crore in the year-ago quarter.



The bottom line improved on the back of healthy growth in net interest income (NII), sharp decline in loan loss provisions and write-back in standard asset provisions.



The public sector bank reported a net profit of ₹1,045 crore in FY22 against a net loss of ₹888 crore in FY21.



In the reporting quarter, NII (difference between interest earned and interest expended) jumped 59 per cent year-on-year (yoy) to ₹2,416 crore (₹1,516 crore in the year-ago quarter).



Non-interest income, comprising fee-based income, trading income, recovery in written-off accounts, and others, declined about 26 per cent yoy to ₹632 crore (₹851 crore).



Provisions towards non-performing assets (NPAs) declined about 73 per cent yoy to ₹893 crore (₹3,259 crore). Write-back in standard asset provisions was at ₹293 crore.



Net interest margin improved to 3.26 per cent in the reporting quarter against 2.04 per cent in the year ago quarter.



Total advances up 7.23 per cent yoy



Gross NPAs declined to 14.84 per cent of gross advances as at March-end 2022 against 16.55 per cent as at March-end 2021. Net NPAs declined to 3.97 per cent of net NPAs against 5.77 per cent.



Total advances increased by 7.23 per cent yoy to stand at ₹1,89,712 crore as at March-end 2022. Within total advances, RAM (retail, agriculture and MSME) advances were up 5.90 per cent yoy and corporate advances rose 9.70 per cent.



Deposits were up 3.85 per cent yoy to stand at ₹3,42,692 crore as at March-end 2022. The proportion of low-cost current account, savings account (CASA) deposits increased to 50.58 per cent as at March-end 2022 against 49.24 per cent as at March-end 2021.



The Bank expects to grow its deposits and advances by 8-10 per cent and 10-12 per cent, respectively, in FY23. Further, it has set a target to bring down the percentage of global GNPAs and NNPAs to below 10 per cent and less than 3.50 per cent, respectively.




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Central bank of India to close 13% of its branches: Report

 



Central Bank of India, a state-owned commercial bank, plans to shut 13% of its branches to improve its financial health, which has been under pressure for several years, according to sources and a document seen by Reuters.


The bank is looking to reduce the number of branches by 600 by either shutting down or merging loss-making branches by the end of March 2023, according to the copy of a document reviewed by Reuters.


It is the most drastic step the lender has taken to improve its finances and will be followed by the sale of non-core assets such as real estate, said a government source who did not want to be named.


The closure of the branches has not been reported previously. The more than 100-year old lender currently has a network of 4,594 branches.


Central Bank along with a clutch of other lenders was placed under RBI's prompt corrective action (PCA) in 2017 after the regulator found some state-run lenders were in breach of its rules on regulatory capital, bad loans and leverage ratios.


Since then all the lenders except Central Bank have improved their financial health and come off RBI's PCA list.


The bank is struggling to come out of PCA of RBI due to poor performance on profit since 2017 and to utilise manpower in more efficient and effective manner," the document dated May 4 sent out by the headquarters to other branches and departments stated, detailing the rationale behind the move.


Central Bank of India did not immediately reply to emails and calls seeking comment


A bank under PCA faces greater scrutiny by the regulator and may face lending and deposit restrictions, branch expansion and hiring freezes and other limitations on borrowings.


The RBI introduced these norms at a time when Indian lenders were battling record levels of soured assets, prompting the RBI to tighten thresholds.


"Central bank of India's move is in line with the set strategy of lowering loss-making assets in its books," the government official said.


In the December quarter, the lender reported a profit of 2.82 billion Indian rupees ($37.1 million) versus 1.66 billion rupees in the previous year in the same quarter.


It gross non-performing assets (GNPA) ratio remains high compared with its peers however, standing at 15.16% as of the end of December.


The bank was placed under the PCA framework in June 2017 and in that quarter the lender had registered a loss of 7.50 billion rupees while its GNPA ratio was at 17.27%.


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IOB, Central Bank divestment on the fast-track


The Centre plans to accelerate the process of privatisation of the Indian Overseas Bank (IOB) and Central Bank of India after the two banks posted good quarterly results, finance ministry sources said. The government’s public policy think tank Niti Aayog has already proposed the names of these two PSBs to the core group of Secretaries on Disinvestment (CGD) for privatisation.


“We had to put a halt to the privatisation process in between because of the protests by bank associations and State elections. But now, after the banks registered positive results in the December quarter, it will gather steam. CGD is assessing the proposal submitted by Niti Aayog, which will then go to the Cabinet committee for final approval,” an official told this newspaper.


Another official pointed out that there is no provision for privatisation of banks in the Bank Nationalization Act. So, an amendment is needed in the Act to privatise the state-owned lenders. “A few amendments have been proposed to the Banking Regulation Act and Bank Nationalisation Act to facilitate the privatisation.


We are trying to make an attractive scheme related to employees’ compensation to avoid strikes,” he added. In the October-December quarter, Chennai-based IOB’s net profit doubled to Rs 454 crore against Rs 213 crore in the year-ago period. In the same period, Mumbai-based Central Bank of India registered a 69% increase in its net profit at Rs 279 crore.


More banks to be identified later

After the completion of the privatisation of IOB and CBI, the Centre will identify other banks for disinvestment in the coming years. The government wants only four large PSBs in the country.

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Central Bank of India Q3 Profit rises 69%

 


Central Bank of India on Friday reported 69 per cent jump in net profit at Rs 279 crore for the quarter ended December 2021 on the back of healthy growth in core income and fall in bad loan proportion. The bank had posted a net profit of Rs 165 crore in the same quarter a year ago.

Gross non-performing assets (NPAs) reduced to 15.16 per cent at end-December 2021, improving by 114 basis points from 16.30 per cent by the year-ago same period, it said.

Net NPAs reduced to 4.4 per cent from 4.73 per cent. However, the bank's provisions for bad loans and contingencies for the quarter rose to Rs 878.93 crore as against Rs 743.74 crore in October-December 2020-21.

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Central Bank of India net profit jumps 55% in Q2




Public sector Central Bank of India on Tuesday reported an over 55 percent jump in net profit at Rs 250 crore for the quarter ended September.

The lender had posted a net profit of Rs 161 crore during the same quarter of the previous fiscal.

However, total income of the bank during July-September period of 2021-22 was down at Rs 6,503.39 crore, as against Rs 6,762.36 crore in the year-ago period, it said in a regulatory filing.

Net interest income rose 5.99 percent to Rs 2,495 crore, as against Rs 2,354 crore earlier.

Net interest margin (NIM) improved from 3.21 percent to 3.36 percent on a year-on-year basis, registering an improvement of 15 basis points, it added.

On the asset quality front, net non-performing assets (NPAs or bad loans) reduced to 4.51 percent as of September 30, 2021, from 5.60 percent by end of the same month last year.

Gross NPAs moderated to 15.52 percent from 17.36 percent.

Also, the bank's cost of deposit declined to 3.84 percent from 4.45 percent for the reported quarter.


However, there was a slight uptick in provisions and contingencies for the quarter at Rs 1,048.52 crore, as against Rs 1,033.34 crore parked aside in the September 2020 quarter.

The state-owned lender said its slippage ratio stood at 1.45 percent as against 0.08 percent as there was a moratorium granted by RBI due to the COVID-19 pandemic. In the June 2021 quarter, it was 0.95 percent.

"Slippage ratio during the quarter increased due to slippage of two corporate accounts of Rs 1,150 crore. Had these accounts not slipped during the quarter then the slippage ratio for Q2FY22 would have been 0.67 percent," the bank said in a release.

Total business stood at Rs 5,12,094 crore as on September 30, 2021, compared to Rs 5,00,737 crore earlier, registering a growth of Rs 11,357 crore (2.27 percent) year-on-year.

Total deposits have increased by Rs 13,056 crore and stood at Rs 3,36,500 crore at the end of the quarter, from Rs 3,23,444 crore in the year-ago period, reflecting an increase of 4.04 percent, it added.


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Central Bank of India Q1 results: reports 53% jump in net profit

 


State-run Central Bank of India posted a 53 per cent jump year-on-year in its net profit to Rs 206 crore in the April-June quarter of this fiscal. The bank had reported a net profit of Rs 135 crore in April-June 2020. It had reported a loss of Rs 1,349 crore in the preceding quarter ended in March 2021.


Total income declined to Rs 6,245.54 crore in the first quarter of 2021-22 from Rs 6,726.68 crore in Q1FY21, the bank said in a regulatory filing.Net interest income remained almost flat at Rs 2,135 crore in the quarter against Rs 2,146 crore in the year-ago quarter.


Gross non-performing assets (NPAs or bad loans) fell to 15.92 per cent of the gross advances by end of June this year from 18.10 per cent by year ago same period, it said.Net NPAs improved to 5.09 per cent from 6.76 per cent.Provision coverage ratio improved to 84.28 per cent as of June 30, 2021 from 79.12 per cent.


The bank said the slippage ratio during the quarter increased to 0.95 per cent from 0.02 per cent in year ago quarter as moratorium was granted by the RBI due to Covid-19 pandemic in June 2020 quarter.

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Government may shortlist two PSU banks for privatization


 The Centre has shortlisted Central Bank of India (CBI) and Indian Overseas Bank (IOB) for divestment.
The two state-run banks might see 51 percent sale in the first phase of disinvestment.


The government will amend the Banking Regulations Act, and some other banking laws for divestment, the news channel reported.

Following the news, shares of CBI and IOB surged 20 percent on June 21.

The weak financial metrics of lenders like CBI and IOB could lead to unexpected hurdles in the government's plan to privatise the lenders, banking analysts.

Both the IOB and CBI are currently under the Prompt Corrective Action (PCA) framework imposed by the Reserve Bank of India (RBI). Under the PCA framework, the central bank imposes certain business restrictions on lenders with weak financial metrics.

The Centre has set an ambitious divestment target of Rs 1.75 lakh crore for FY22.

The government's plans to sell its stakes in Air India, Bharat Petroleum Corporation (BPCL), Shipping Corporation of India and some other companies have been disrupted due to the COVID-19 pandemic
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Central Bank of India Q4 results: Lender's net loss narrows

 




State-owned Central Bank of India on Monday reported narrowing of its net loss to Rs 1,349.21 crore on a standalone basis in the last quarter of the fiscal ended March 2021. The bank had posted a net loss of Rs 1,529.07 crore in the same quarter of the preceding fiscal year. Sequentially, there was a net profit of Rs 165.41 crore in the December quarter of FY21.

Net profit (standalone) for the entire fiscal 2020-21 was down by 20.84 per cent to Rs 887.58 crore as against Rs 1,121.35 crore in 2019-20, Central Bank of India said in a regulatory filing.

Income (standalone) during Q4FY21 also fell to Rs 5,779.84 crore from Rs 6723.73 crore in Q4FY20.

For the full year, the income was down at Rs 25,897.44 crore as against Rs 27,199.29 crore in FY20, the bank said.

The asset quality of the state-owned lender showed improvement with the gross non-performing assets (NPAs) falling to 16.55 per cent of the gross advances by end of March 2021 as against 18.92 per cent by year-ago same period.

In absolute value, gross NPAs fell to Rs 29,276.96 crore from Rs 32,589.08 crore.

Net NPAs were also trimmed to 5.77 per cent (Rs 9,036.46 crore) from 7.63 per cent (Rs 11,534.46 crore).

Provisions for bad loans and contingencies during the reported quarter rose to Rs 3,130.33 crore from Rs 2,178.33 crore put aside for the year-ago quarter.

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Government is considering mid-sized to small banks for its first round of privatisation.


Government has shortlisted four mid-sized state-run banks for privatization, under a new push to sell state assets and shore up government revenues, three government sources said.


Privatisation of the banking sector, which is dominated by state-run behemoths with hundreds of thousands of employees, is politically risky because it could put jobs at risk but Prime Minister Narendra Modi's administration aims to make a start with second-tier banks.


The four banks on the shortlist are Bank of Maharashtra, Bank of India, Indian Overseas Bank and the Central Bank of India, two officials told Reuters on condition of anonymity as the matter is not yet public.


Two of those banks will be selected for sale in the 2021/2022 financial year which begins in April, the officials said. The shortlist has not previously been reported.


The government is considering mid-sized to small banks for its first round of privatisation to test the waters. In the coming years it could also look at some of the country's bigger banks, the officials said.


The government, however, will continue to hold a majority stake in India's largest lender State Bank of India, which is seen as a 'strategic bank' for implementing initiatives such as expanding rural credit.


A finance ministry spokesman declined to comment on the matter.


India's deepest economic contraction on record caused by the pandemic is driving the push for bolder reforms, economists say.


Government also wants to overhaul a banking sector reeling under a heavy load of non-performing assets, which are likely to rise further once banks are allowed to categorise loans that soured during the pandemic as bad.


PM Modi's office initially wanted four banks to be put up for sale in the coming fiscal year, but officials have advised caution fearing resistance from unions representing the employees.

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Central Bank of India Q3 net profit up 6.5%


State-owned Central Bank of India on Tuesday reported a 6.5 per cent rise in its net profit to Rs 165.41 crore in the third quarter ended December. The bank had posted a net profit of Rs 155.32 crore in the corresponding year-ago period.


Total income, however, fell to Rs 6,556.98 crore in October-December period of 2020-21 as against Rs 7,278.29 crore in same period of 2019-20, the bank said in a regulatory filing. Interest income for the quarter under review was down to Rs 5,782.61 crore from Rs 6,028.88 crore in the year-ago quarter.


The bank’s asset quality improved with gross non-performing assets(NPAs) falling to 16.30 per cent of the gross advances as of December 31, 2020, from 19.99 per cent by end of December 2019.


In value terms, gross NPAs or bad loans stood at Rs 29,486.07 crore as against Rs 33,259.59 crore. Net NPAs in the said quarter also came down to 4.73 per cent (Rs 7,514.65 crore) from 9.26 per cent (Rs 13,568.05 crore) in the year-ago period.


Provisions for bad loans and contingencies also decreased to Rs 743.74 crore for Q3FY21 from Rs 1,249.21 crore kept aside for the year-ago quarter.

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Eye on this PSBs to be privatise: Govt mulls corporate, foreign bank participation

 


Indian policymakers are discussing ways to open up the banking sector via easing norms for corporate and foreign bank participation in acquiring public sector banks that the central govt is looking to privatise, sources with knowledge of the matter told ET Now.

Currently, industrial houses that have less than 60% of their turn over from non-financial entities are not allowed to apply for bank licences and their equity participation is also limited to 10%, as regulators have feared that this could risk financial stability because of the propensity of the corporates to milk banks for ‘self-loans.’

ET Now learns that there’s a rethink on the existing policy between policymakers even as the discussions are at an “early stage”. Sources say the government and the central bank may move with “abundant caution” and will take into account global experience and prior experience as well. 

Greater regulatory vigilance in terms of preferring corporate players with a long term 10-year business plan, “Fit & Proper Criteria” for corporate participation for taking equity in banks, tighter norms for related party transactions could be put in to ensure no excessive concentration or risks to financial stability. 

"We need to open up the banking system but the move will be designed with “abundant caution” and will need stonewalling from misuse. Opening up banking sector will come with greater regulatory vigilance on banks, fin institutions," one of the officials told ET Now.

Policymakers are also discussing allowing foreign banks with Indian subsidiaries to participate in buying government stake when state-owned banks like Central Bank of India, Bank of India, Punjab and Sind Bank, IOB and UCO Bank are privatised. 

The banking sector has been plagued with rising bad loans leading to decline in capital adequacy ratios and in some cases failure. Recently, Yes Bank was saved through government and RBI intervention when SBI lead consortium infused more capital into the private lender to save it from bankruptcy. Last week the government and RBI had to intervene to aid the rescue of Lakshmi Vilas Bank by the Indian subsidiary of DBS Bank, a move that reflected a change in thinking of the central bank and the government. 

Besides DBS, there are only one other foreign bank that has Indian subsidiaries -- SBM Bank. SBM Bank (India) Limited (Subsidiary of SBM Group) and DBS Bank India Limited have been issued licence on December 6, 2017, and October 4, 2018, respectively for carrying on banking business in India through a wholly-owned subsidiary. 

The widening of this move to allow foreign banks to buyout public sector banks when the government decides to privatise them will not only increase competition in the sector leading to efficiency but will also make a paradigm shift in the sector. The larger aim is to make Indian banks globally competitive. 

The discussion on this is at early stage but the policy could be timed with the government's larger privatisation policy that will allow selling of some Indian public sector banks. Bank of India, Central Bank of India, Bank of Maharashtra, Punjab & Sind Bank are some of the state-run lenders that the government is looking to privatise.

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Central Bank of India Q2 Results: Net profit rises 20%


Central Bank of India on Friday reported over 20 per cent rise in its net profit at Rs 161 crore for the second quarter ended September 30. The bank had posted a net profit of Rs 134 crore in the corresponding quarter of the previous financial year.

Its total income grew nearly 2 per cent to Rs 6,833.94 crore during July-September 2020, against Rs 6,703.71 crore in the year-ago period, Central Bank of India said in a regulatory filing.

Operating profit improved to Rs 1,458 crore, registering a growth of 42.16 per cent from Rs 1,026 crore a year ago, it said.

The lender also improved on its bad assets ratio with the gross non-performing assets (NPAs) falling to 17.36 per cent of gross advances by the end of September 2020, from 19.89 per cent by the end of September 2019.

Net NPAs fell to 5.60 per cent, against 7.90 per cent in the year-ago quarter.

In value terms, the gross NPAs fell to Rs 30,785.43 crore from Rs 33,497.22 crore, while net NPAs stood at Rs 8,683.58 crore as against Rs 11,551.91 crore.

Provisions for bad loans and contingencies, however, rose to Rs 1,104.92 crore for the reported quarter of 2020-21, from Rs 791.33 crore in the year-ago period.

The bank's total business stands at Rs 5,00,737 crore as against Rs 4,73,080 crore, it added.

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