Central Bank of India’s Performance Dips In September 2013 Quarter

Central Bank of India (CBI) disappointed the street with poor financial numbers for Q2FY14. The bank reported a net loss of Rs 1508.74 crore in the September 2013 quarter as compared to a net profit of Rs 329.92 crore in the September 2012 quarter. The Net Interest Income (NII) in the same period increased by 1.27% year-on-year to Rs 1433.8 crore against Rs 1415.86 in Q2FY13.

CBI’s other income grew by 7.27 % to Rs 377.65 crore during the elapsed quarter from Rs 352.06 crore in the corresponding quarter of the last fiscal. Its provisions and contingencies rose to Rs 2049.09 crore in the September 2013 quarter, up 379.75% from the September 2012 figure. This surge in provisions and restructured loans resulted in losses, which the lender incurred after at least 12 quarters.

The bank reported a jump in its Gross NPAs, which came in at Rs 11563.03 crore, up 35.92% YoY from that of Rs 8507.07 crore in Q2FY13 and 9.82% QoQ from Rs 10529.21 crore in Q1FY14. CBI's ratio of net non-performing assets (NPAs) to net advances stood at 3.77% as on September 30, 2013, compared to 3.85% as on June 30, 2013 and 3.8% as on September 30, 2012. The ratio of gross NPAs to gross advances stood at 6.47% as against 6.03% as on June 30, 2013 and 3.8% as on September 30, 2012. Power, textile and aviation were the sectors contributing to the bank’s rising bad loans.

Rajeev Rishi, Chairman and Managing Director of the bank expressed hope of getting capital support of Rs 1800 crore from the government, which holds 85.31% stake in the bank. The stock is not faring well in terms of RoA and asset quality either. The banking industry can expect to see more stress in the coming quarters, and recoveries are the sole factor that could get the bank back on track.