Central Bank of India Q1 Net slumps 93% to Rs 22 crore

MUMBAI: Rising bad loans has taken a toll on Central Bank of India's bottomline, which saw a sharp dip of 93% in net profit to Rs 22 crore in the first quarter of June 2013. M V Tanksale, chairman and managing director of the bank blamed higher provisions and the slowdown in the economy that resulted in rising defaults in the loans.

"Its looks like I am earning just to make provisions. Main pain is coming from increased provisions on restructured assets and NPAs (non-performing assets),"said Mr Tanksale. "The downturn in the economy has made resolution of NPAs a difficult task." he added.

The bank was hit by double whammy since on one hand Rs 2400 crore of loans slipped into bad loan category, up 69% over corresponding period, while on the other hand only Rs 93 crore of loans was upgraded into performing category, down 84% a year ago. Recoveries were also lower by 31% to Rs 201 crore. Gross NPA rose 40% on year and was 6% of total assets for quarter ending June 2013. The bank's provision rose 120% to Rs 983 crore.

Considering the economic scenario, the bank has revised its gross and net NPA targets to 5% and 3% respectively from 4 and 2% targeted for this year, Mr Tanksale said.

Its net interest income rose 11.5% to Rs 1537 crore and non-interest income rose 85% Rs 598 crore. Total deposits rose 17% to Rs 230760 crore while advances rose 13.2% to Rs 174623 crore.