Centurion NPAs up 100 bps

Centurion Bank's net non performing assets (NPA) have risen by over 100 basis points to 8.75 per cent as on February 6, 2004, against 7.51 per cent recorded in March 2003.

The bank explains the rise in NPAs on account of the adoption of the 90-day income recognition norm. At the same time, the merger of Bank Muscat's single branch in Bangalore with Centurion Bank has also added to NPAs on the retail side, industry sources said. The balance sheet of the two banks were merged in December 2003.

Centurion Bank's draft prospectus for its forthcoming rights issue filed with the Securities and Exchange Board of India (Sebi) highlights the rising level of NPAs on the back of increased retail advances.

As on February 2004, NPAs from retail lending more than doubled to 14.04 per cent against 5.77 per cent in March 2003.

While NPAs from corporate lending remained almost at the same level at 68.55 per cent against 68.8 per cent in March 2003.

In absolute terms, the aggregate NPAs amounted to Rs 318.01 crore as on February 6, against Rs 228.43 as of March-end 2003.

Sticky assets from corporate lending rose to Rs 218 crore (Rs 157.17 crore as on March 2003).

NPAs in the retail portfolio rose to Rs 44.68 crore (Rs 13.19 crore), while those in the 'other' portfolio fell to Rs 55.33 crore (Rs 58.07 crore).

Centurion Bank has increased its provisioning against NPAs to 58.86 per cent against 54.43 per cent in March 2003 and 56.15 per cent in the preceding fiscal (March 2002).

More than 70 per cent of the Centurion Bank's loan book comprises retail lending.

The bank's retail assets have grown to Rs 1,183.55 crore as on February 2004 against Rs 898.83 crore in March 2003.

This is primarily on account of the merger with Bank Muscat, which was into car loans and personal loans.

Within total retail advances, the bank's primary focus has been on financing two-wheelers, commercial vehicles and construction equipment. These together constituted 77 per cent of retail loans as on February 6, 2004.

As a result of the merger of Bank Muscat with Centurion Bank, the latter's car loan and personal loan portfolio surged by Rs 52.28 crore and Rs 64.16 crore. As of February 6, the outstanding car loan and personal loan portfolio was Rs 53.51 crore and Rs 80.29 crore respectively.

Meanwhile, the bank's capital adequacy ratio as on February 2004 stood at 8.08 per cent against 1.95 per cent in March 2003.

On completion of its Rs 90.8 crore proposed rights issue, the bank expects to meet the stipulated nine per cent capital adequacy ratio.