Central Bank H1 net flat at Rs 222 crore

Central Bank of India has posted a marginal 3.26 per cent growth in net profit at Rs 222 crore for the first half (H1) ended September 2007 as against Rs 215 crore in April-September 2006.

Its net interest margins (NIM) fell to 2.73 per cent at the end of September 2007 from 3.19 per cent a year ago, reflecting pressure from a rise in cost of resources. The average cost of deposits rose to 5.96 per cent from 4.84 per cent.

The bank is likely to cut term deposits rates by 50-100 basis points to manage the cost of funds and protect margins. The bank's asset-liability committee would review interest rates soon, its Chairperson and Managing Director H A Daruwalla said.

The state-owned bank listed its shares on the stock exchanges in the second quarter (July-September 2007) after the initial public offer. Hence, it has not provided comparative figures for the second quarter of the last year and this financial year.

The interest spread (NII) declined to Rs 1,138 crore from Rs 1,163 crore a year ago. The yield on advances rose to 9.62 per cent from 8.47 per cent a year ago.

The deposits rose to Rs 90,845 crore from Rs 76,221 crore, while the advances increased by 24.80 per cent to Rs 53,971 crore.

Its other income was also down to Rs 249.44 crore from Rs 313.27 crore. The bank was not able to engage in intensive treasury operations, which limited the prospects of earning additional income.

The bank would increase trading in equity markets. It plans to double the size of its equity portfolio to Rs 1,000 crore by the end of March 2008. The bank expected to better its income by churning equity investments, Daruwalla said.

The net non-performing assets (NPAs) declined to 1.41 per cent from 2.11 per cent. The capital adequacy ratio rose to 12.38 per cent from 11.52 per cent.