CENTRALBK - Central Bank of India Share Price

In the earnings call on April 30, 2026, management provided an optimistic outlook for the Central Bank of India, reporting a total business growth of 15.60%, reaching INR 812,439 crores. Deposits increased by 13.38% to INR 467,923 crores, with CASA deposits constituting 47.30% of total deposits, reflecting a robust retail banking focus. Highlights included savings bank growth exceeding 10% for the first time crossing INR 2 lakh crores, and gross advances increasing by 18.76% to INR 344,516 crores, resulting in an improved CD ratio of 73.80%.

Management indicated improvements in asset quality, with gross NPA at 2.67% (down 51 basis points year-on-year) and net NPA at 0.49%, an improvement of 6 basis points. The provision coverage ratio stood at 96%. The bank reported a net profit increase of 15.43% year-on-year to INR 4,369 crores despite a one-time impact of INR 632 crores due to changes in deferred tax assets.

For FY '27, the bank targets credit growth of 14-16% and deposit growth of 10-12%. Management emphasized a strong capital base with CRAR at 17.91%, allowing it to manage growth aspirations effectively. Expecting an operational focus on retail, agriculture, and MSME sectors, the management stated that slippage integrity is being maintained below 1%. They expressed confidence in sustaining a net interest margin (NIM) above 3%.

Key forward-looking points include:

• Expected operational leverage benefits from technology investments.
• Enhancing outreach programs targeting retail and MSME clients.
• Continuation of a dividend policy, proposing a 12% dividend (INR 1.20 per share) for FY 2026.
• Implementation of new ECL guidelines with a projected ongoing credit cost increase of about INR 600"“650 crores, balanced by benefits from a lower tax regime, enhancing profitability.

The management confidently reiterated their focus on sustainable growth while improving asset quality and maintaining robust financial health.

Q&A Section Summary from Earnings Call Transcript

Question 1:

Ashok Ajmera: Are you seeing any stress in the system for the current fiscal because of geopolitical situations or any old accounts slipping?

Kalyan Kumar: The reduction in profit is primarily due to AFS mark-to-market shifts and decreased recovery in written-off accounts, not indicative of systemic stress. Our slippage ratio improved to 1.16%. We see no stress signals from geopolitical tensions, and we've not received requests for overdue payments due to recent events, ensuring a stable outlook for asset quality.

Question 2:

Ashok Ajmera: How prepared are we for the ECL framework, and its potential impact on profitability?

Kalyan Kumar: We've been developing models and enhancing data quality for ECL compliance. We are confident that growth and the transition will not substantially impact profitability. We have made additional provisions of INR1,575 crores, and although we cannot confirm specific numbers, we are technologically prepared for the transition.

Question 3:

Ashok Ajmera: Could you provide insights on technology investments?

Kalyan Kumar: I will provide details offline, but I can assure you we are making significant investments in technology to improve our operational efficiencies and data handling.

Question 4:

Ashok Ajmera: What is the treasury's outlook for FY '27?

Kalyan Kumar: We started this year with a yield of 6.58% and closed at 7.03%. Despite low treasury profitability last quarter, we anticipate optimizing our investment portfolio for better returns in FY '27.

Question 5:

Ashok Ajmera: What are our credit growth targets and sanctions pipeline?

Kalyan Kumar: Our CRAR is at 17.91%, supporting credit growth guidance of 14-16%. We're actively mobilizing leads through outreach programs, targeting RAM segments. Our undisbursed sanctions consist mainly of our retail, agriculture, and MSME focuses.

Question 6:

Sushil C. Choksey: Can you elaborate on FY '27 targets for deposits and profitability?

Kalyan Kumar: We're targeting a deposit growth of 10-12% and advance growth of 14-16%. With effective marketing and training programs, we believe our CASA ratio and asset quality will improve, aided by expected new income from the tax regime change.

Question 7:

Sushil C. Choksey: How are we preparing for recovery from technical written-off assets?

Kalyan Kumar: We have INR32,000 crores in written-off assets and aim for INR2,200-2,500 crores in recoveries this year.

Question 8:

Sushil C. Choksey: Update on insurance joint ventures and potential benefits?

Kalyan Kumar: We are leveraging our insurance tie-ups, generating INR161 crores this year, flat relative to last year. We see significant untapped potential in this area.

Question 9:

Ashlesh Sojne: Can you clarify fresh slippages and their reasons?

Kalyan Kumar: Recent slippages largely stem from technicalities highlighted by auditors regarding variances in credit submissions and business projections; agriculture accounts were also affected, but we remain focused on improving our monitoring processes.

Question 10:

Ashlesh Sojne: What is the expected impact of transitioning to ECL on recurring credit costs?

Kalyan Kumar: We estimate ongoing provisions could increase by INR600-650 crores, balanced by tax regime benefits of around INR600-800 crores.

Question 11:

Ashlesh Sojne: Why did NIM improve despite yield stagnation?

Kalyan Kumar: Our NIM increase is partly due to a tax refund and because most of our advances are benchmark-linked, allowing us to pass on costs with a lag. We expect to optimize these processes going forward.

Question 12:

Siddharth: How do you see yield and NIM moving in next year?

Kalyan Kumar: We aim to maintain our NIM above 3% through strategic management of our CASA and RAM ratio while ensuring liquidity is not an issue for our growth objectives.