Daily Equity News- 02- NOV- 2011

Central Bank Q2 net down 36% at Rs 244cr on higher NPAs

 Public sector lender Central Bank of India's (CBI) second quarter (July-September) net profit shrank nearly 36% year-on-year to Rs 244 crore on higher provisions against non-performing assets. Its net interest income or the difference between interest earned and expended too rose at a slower pace nearly by 4% to Rs 1,396 crore. 

All in all, the quarterly numbers were below the street expectations.

"We will dedicate next quarters for recovering and upgrading of loan accounts,” said Mohan Tanksale , CMD , Central Bank of India addressing a press conference in Mumbai.

“We started implementing the process of NPA generation through computer from December, 2010 onwards. We hope to complete it between December and March. This could further dent our NPA levels by another 52 basis points. However, we aim to grow our loan book by 18% for the full fiscal as the next two quarters, the so-called busy season, will generate good credit demand for us."

As per the Reserve Bank of India's mandate, every bank will have to convert the process of non-performing asset generation from manual to computer system wherein an loan will be identified as NPA automatically as and when it falls below certain benchmarks. The implementation of such system will initially increase banks' NPA levels.

CBI's gross NPA ratio stood at 2.94% compared with 2.29% in April-June quarter. Net NPA ratio too worsened from 0.87% to 1.37% quarter-on-quarter. Consequently, the bank had to provide for the incremental bad loans. Provisions and contingencies increased to Rs 431 crore as against Rs 240 crore a year back. This has dented bank’s profit margin. Source :- moneycontrol.com