Central Bank of India Net Profit Drops By 66%

Government owned Central Bank of India posted its result for third quarter of FY14. The net profit of the bank fell by 66% on yearly basis to Rs 61.53 crore for Q3FY14. This is despite one of the best jump in the net interest income (NII) in the entire banking sector. NII of the bank increased by 28% on yearly basis to Rs 1807 crore for Q3FY14. However, other income witnessed a marginal drop of 1% on yearly basis and was at Rs 354.6 crore for Q3FY14.

The reason for such fall in the net profit was rise in the operating expenses and tax expenditure. The operating expenses increased by 31% on yearly basis to Rs 1293 crore for Q3FY14. Tax expenses too increased by Rs 177 crore on yearly basis. 

In terms of asset quality there was a mixed performance by the bank. Gross NPA of the bank as proportion to its advances has increased by 84 basis points and 1basis points on yearly and quarterly basis respectively. However, net NPA of the bank has improved on both sequential as well as on yearly basis by 10 basis points and 8 basis points respectively. 
Shares of the bank are currently trading at price to book value of around 0.5 times. We do not advise any fresh purchase as of now.