Central Bank of India Q2 net down 35%

State-run lender, Central Bank of India posted a decline in net profit due to higher provisioning made on bad loans in the July-September quarter. The bank’s net profit was at Rs 244 crore for the quarter ended September, lower by 35.62 per cent as compared to Rs 379 crore in the corresponding quarter last year.

The bank’s non-interest income grew 31 per cent while its net interest income grew 3.79 per cent in the period under review. The bank made provisions of Rs 392 crore against non-performing assets which is about five times higher than the provisions made last year.

Net NPA ratio increased to 1.37 per cent from 0.68 per cent while gross NPAs increased to 2.94 per cent from 2.28 per cent a year ago as the bank migrated to automated NPA recognition system. The bank is expected to report further rise in the NPA portfolio in coming two quarters. “The entire loan book of the bank has not yet been transferred to the system. It should complete by March 2012,” said M V Tanksale, chairman and managing director. He said that the delay in transition was due to late adoption of core banking solutions (CBS).

The bank’s net interest margins (NIMs) fell three per cent from 3.42 per cent a year ago. “We will shed bulk deposits of around Rs 4,000 crore in the third quarter which will bring down the cost of deposits and help maintain NIMs at around 3 per cent,” said Tanksale. Bulk deposits constituted around 30 per cent of the bank’s total deposit base. Capital adequacy ratio stood at 12.76 per cent at the end of September.