Central Bank Q4 net dips 14.8%

Central Bank of India has posted a 14.8 per cent drop in its fourth quarter net profit due to sharp rise in interest costs and establishment expenses.

The net profit for January-March 2008 dipped to Rs 127.20 crore from Rs 149.13 crore a year ago. Its net interest income dipped by 25.22 per cent to Rs 538.28 crore from Rs 719.84 crore.

Consequently, its net interest margin nosedived to 2.19 per cent in Q4 from 3.61 per cent in the corresponding period a year ago.

The bank's board has recommended a 20 per cent dividend for 2007-08, same as was announced for 2006-07.

Financial parameters quarter ended March
Rs crore	2007	2008	% chg
Interest income	1775	2240	26.2
Total income	1994	2539	27.33
Net profit	149	127	-14.77
Deposits	8277a6	110320	33.28
Advances	53489	74287	38.88
Gross NPA (%)	4.81	3.16
Net NPA	1.7	1.45
Net interst margin (%)	3.61	2.19

Besides the rise in cost on employee-related expenses, the bank had to retire bulk deposits (contracted at high cost) worth Rs 9,000 crore in March with matching amount of resources by giving attractive rates. The demand for credit also shot up by Rs 15,000 crore in the quarter, Chairman and Managing Director H A Daruwalla told reporters.

The Mumbai-based public sector bank offered interest rate as high as high 10.50 per cent on bulk deposits, (predominantly short-term deposits).

The bank has decided to make provisions for AS15 obligations such as pension and other employee benefits in one go instead of spreading obligation over five years. It will take out Rs 875 crore from reserves for AS15 obligations.