Central Bank of India Reports a 51% Surge in Q2FY25 Profit; Strong Growth Across Segments

Central Bank of India has posted robust financial results for the second quarter of FY25, reporting a net profit surge of 51% to ₹912.8 crore, compared to ₹605.4 crore in the same quarter last year. The bank's stellar performance was driven by higher Net Interest Income (NII) and significant growth across key business segments, including Retail, Agriculture, and MSME (RAM).

Key Highlights of Q2FY25 Results

Net Profit: The bank recorded a net profit of ₹912.8 crore, up 51% YoY from ₹605.4 crore in Q2FY24.

Net Interest Income (NII): NII grew by 13% to ₹3,410 crore, compared to ₹3,021 crore a year ago.

Total Business Growth: The bank’s total business reached ₹644,858 crore, reflecting a 7.07% increase YoY.

Gross Advances: Advances grew by 9.48% to ₹252,944 crore from ₹231,032 crore YoY.

Deposits: Total deposits increased by 5.57% to ₹391,914 crore, while CASA deposits rose by 4.61%, now accounting for 48.93% of total deposits.

Gross Non-Performing Assets (NPA): Gross NPA ratio improved slightly, standing at 4.59%, marking a 3 basis point (bps) reduction YoY.

Provision Coverage Ratio: The bank strengthened its Provision Coverage Ratio to 96.31%, a YoY improvement of 377 bps.

Basel III Capital Adequacy Ratio: The bank's Capital Adequacy Ratio improved to 16.27%, with a Common Equity Tier 1 (CET1) ratio of 14.01%, up by 145 bps.

Segment-Wise Growth: Focus on Retail, Agriculture, and MSME (RAM)

The bank's key growth drivers in Q2FY25 were its RAM segments, which saw impressive expansion:

Retail Loans: Up 15.48% YoY.

Agricultural Loans: Up 17.34% YoY.

MSME Loans: A remarkable growth of 29.45% YoY.

The significant boost in the RAM portfolio reflects the bank's strategy of focusing on high-growth sectors to drive profitability and expand its market presence.

Improved Operational Ratios: ROA and CD Ratio

Central Bank of India has also reported improvements in key operational ratios:

Return on Assets (ROA) improved to 0.85%, up from 0.62% in Q2FY24, highlighting enhanced efficiency in asset utilization.

The Credit to Deposit (CD) Ratio rose to 64.71%, marking an increase of 228 bps since September 30, 2023.

These improvements in ROA and CD ratio underscore the bank’s strong asset quality and its ability to efficiently manage its deposit base.

Asset Quality and Capital Adequacy

The bank continues to maintain a robust Provision Coverage Ratio (PCR), which reached 96.31%, further enhancing its asset quality. Additionally, the Gross NPA ratio saw a slight improvement, reducing to 4.59% from 4.62% YoY.

The Basel III Capital Adequacy Ratio of 16.27% reflects the bank’s strong capital position, ensuring it remains well-capitalized for future growth. The CET1 ratio of 14.01% represents a significant boost in core capital, providing a cushion against potential risks and market volatility.

CASA Growth and Deposit Composition

The bank’s focus on low-cost deposits continues to deliver positive results. CASA deposits (Current Account Savings Account) grew by 4.61%, adding ₹8,432 crore to reach ₹191,270 crore. CASA deposits now account for 48.93% of the bank's total deposits, emphasizing its growing base of low-cost deposits, which enhances profitability.

Outlook for the Future

With a strong capital base, improved operational ratios, and significant growth across the RAM sectors, Central Bank of India is well-positioned for continued growth in the coming quarters. The bank’s focus on enhancing its asset quality, improving cost efficiencies, and expanding its retail and MSME loan portfolio will likely drive further profitability.

As commodity prices and interest rates stabilize, the bank's operational performance is expected to improve, making it an attractive option for investors looking at stable banking stocks with potential for long-term growth.

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