GuruFocus -
- Total Business Growth: 7.07%, now at INR6.44 lakh crore.
- Total Deposits: INR3.91 lakh crore, with CASA at INR1.91 lakh crore (48.93% of total deposits).
- Gross Advances Growth: 9.48%, now at INR2.52 lakh crore.
- Credit Deposit Ratio: Improved to 64.71% from 62.5% in September '23.
- Gross NPA: 4.59%.
- Net NPA: 0.69%.
- Provision Coverage Ratio: 96.31%.
- Net Profit Growth: 50.91%, now at INR913 crore.
- Net Interest Income: INR3,410 crore.
- Net Interest Margin: 3.44%.
- Return on Assets: Improved to 0.85%.
- Return on Equity: Improved to 3.19%.
- Capital Adequacy Ratio (CRAR): 16.27%, with Tier-I at 14.01%.
- Total Interest Income Growth: 11.58%, now at INR8,202 crore.
- Total Interest Expenses Growth: 10.85%, now at INR4,792 crore.
- Total Income Growth: 17.08%, now at INR9,849 crore.
- Total Expenditure Growth: 11.65%, now at INR7,684 crore.
- Operating Profit Growth: 41.50%, now at INR2,165 crore.
- Provisions: INR1,252 crore.
- Interest on Advances Growth: 14.18%, now at INR5,402 crore.
- Interest on Investments Growth: 9.13%, now at INR2,547 crore.
- Non-Interest Income Growth: 55.23% YoY, now at INR1,647 crore.
- Staff Cost Growth: 27.4%, now at INR1,827 crore.
- Corporate Loan Book Degrowth: 10.61%, now at INR70,739 crore.
- Retail Advances Growth: 15.48%, now at INR76,373 crore.
- Agriculture Advances Growth: 17.34%, now at INR50,280 crore.
- MSME Advances Growth: 29.45%, now at INR55,552 crore.
- Housing Loan Growth: 18.51% YoY.
- Education Loan Growth: 28.95%.
- Auto Loan Growth: 15.8%.
- Personal Loan Growth: 10.35%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Central Bank of India (BOM:532885) reported a net profit growth of 50.91%, reaching INR913 crore, marking the 14th consecutive quarter of profitability.
- The bank's net interest income increased by 12.62% to INR3,410 crores, with a net interest margin of 3.44%.
- The gross advances grew by 9.48% to INR2.52 lakh crore, and the credit deposit ratio improved to 64.71%.
- The bank's asset quality improved, with net NPA reduced to 0.69% and a provision coverage ratio of 96.31%.
- The bank received CCA approval to acquire significant stakes in life and non-life insurance divisions, potentially enhancing future revenue streams.
- The credit growth was muted, with only a slight increase in gross advances from INR2,51,000 crore in March to INR2,52,000 crore.
- There was a conscious decision to reduce the corporate loan book by INR7,000 crores, impacting overall credit growth.
- The total expenditure increased by 11.65% to INR7,684 crores, which could pressure future profitability if not managed.
- The bank's standard restructured book remains significant at INR5,808 crores, with additional provisions made, indicating potential risk.
- The SMA 1 book above INR5 crores increased significantly quarter-on-quarter, raising concerns about potential future slippages.
A: M.V. Rao, MD and CEO, explained that the bank is focusing on protecting the bottom line rather than just increasing the top line. The bank has consciously reduced its corporate loan book due to unattractive interest rates and aims for a credit growth target of 12% to 14% for FY25, depending on market opportunities and account ratings.
Q: Can you provide details on the provisions for standard restructured accounts?
A: Mukul Dandige, CFO, stated that the bank holds around 11% to 12% provisions on the standard restructured book, which includes provisions from earlier RBI circulars and COVID-related restructuring. An additional INR250 crores provision has been made on a prudence basis.
Q: What is the outlook for treasury operations and recoveries from written-off accounts?
A: Vivek Wahi, Executive Director, expressed optimism about treasury yields due to expected rate cuts and confirmed that there are accounts in the pipeline for recoveries, which should support profitability in the remaining financial year.
Q: How will the acquisition of stakes in Future Generali (BIT:GASI) impact the bank?
A: M.V. Rao, MD and CEO, mentioned that the acquisition cost was INR508 crores, and the bank sees significant synergies, particularly in bancassurance, which currently contributes INR140 crores to the P&L. The bank expects to leverage its large customer base for further growth.
Q: What is the strategy for deposit growth and managing the CD ratio?
A: M.V. Rao, MD and CEO, stated that the bank aims to reach a 70% CD ratio by the end of the financial year. The focus will be on acquiring new CASA customers and offering differentiated products, while maintaining a conservative approach to deposit mobilization.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.