State-run lender Central Bank of India reported a net loss of Rs 105 crore for the quarter ended March 31, on the account of significant rise in provisions for non-performing loans. In the same quarter last year, the bank had reported a net profit of Rs 113 crore.
This is the first quarterly loss posted by the bank since it was listed in mid 2006.
Due to higher restructured assets, provisions during the quarter more than doubled to Rs 857 crore against Rs 306 crore in the same period a year ago. During 2011-12, loans worth Rs 17,347 crore were restructured, a three-fold rise from Rs 5,294 crore a year ago. Of these, Rs 7,781 crore of loans were restructured in the last quarter.
“During the last quarter total slippages on restructured loans stood at Rs 1,495 crore, which impacted the profitability of the bank,” M V Tanksale, chairman and managing director of Central Bank of India, said.
Total slippages in the quarter stood at Rs 3,300 crore. Of the total restructured loans, power distribution companies accounted for more than Rs 6,400 crore, whereas the aviation and telecom sectors accounted for around Rs 1,786 crore and Rs 1,351 crore respectively.
The gross non-performing asset (NPA) ratio went up to 4.83 per cent as against 1.82 per cent over a year ago. In the third quarter ending December 31, 2011, the gross NPA was at 3.69 per cent. Net NPAs jumped to 3.09 per cent as against 0.65 per cent a year ago.
“We have implemented automated NPA recognition system during the year. The higher NPA was largely on the account of that as many marginal cases have slipped to NPA on account of this new system,” Tanksale said. “Worst is over as far as the NPA and the restructuring goes. We are confident of bringing down our gross NPA ratio during 2012-13 to 3.5 per cent and net NPA under 2 per cent.”
During the quarter under review, net interest income of the bank declined by 11.5 per cent to Rs 1,263.59 crore from Rs 1,428.54 crore a year ago. However, total income was higher by 12.97 per cent to Rs 5,371.75 crore, compared with Rs 4,755.21 crore reported in the corresponding period a year ago.
Net interest margin (NIM) improved to 2.59 per cent from 1.81 per cent in the same period a year ago. The capital adequacy ratio stood at 12.40 per cent.
During 2011-12, the lender grew its loan book by 14.7 per cent to Rs 1.31 lakh crore, whereas the deposits went up by 9.38 per cent to Rs 1.96 lakh crore. In the current financial year, the bank aims to grow its loan book and deposit book by 20 per cent and 25 per cent respectively.
Speaking about the Basel-III requirements, Tanksale said the bank would require around Rs 14,000 crore by 2018 to meet the norms, and it plans to go for a follow-on-public offer to raise the funds.
Following the dismal quarterly results, the share price of the bank tanked 12.75 per cent at the Bombay Stock Exchange and closed at Rs 77.55 per share against the previous close of Rs 89.90 per share.
