State-run lender Central Bank of India reported a ₹115 crore net profit for the quarter ended December 31, compared with a ₹718 crore loss in the comparable period of the previous financial year.
The profit of the lender, which is under the prompt corrective action framework (PCA) of the Reserve Bank, was on the back of a sharp rise in recovery from written off accounts, which was ₹520 crore during the quarter as compared to ₹25 crore.
This was mainly due to recovery made from Ruchi Soya, which was resolved through the bankruptcy process. Patanjali Ayurved acquired Ruchi Soya for ₹4,350 crore during the quarter.
The bank’s interest income got a boost due to the resolution of Essar Steel and also helped to write back provisions made earlier. The bank’s interest income increased 4.2% year-on-year to ₹6,029 crore. NPA provisions almost halved to ₹1,104 crore compared to ₹2,077 crore.
Slippages, however, remained high at ₹3,998 crorecompared to ₹1,934 crore.
The slippages included ₹1,800 crore due to divergence, while other slippages during the quarter were at ₹2,445 crore. Among accounts that slipped into the NPA category during the quarter was that of Dewan Housing Finance Corporation Ltd., to which the bank had an exposure of ₹900 crore.
“Our exposure to the NBFC sector is ₹12,892 crore, which is 7.8% of the total exposure.
The exposure is mainly to three borrowers, DHFL, Religare Finvest and I-FIN [IL&FS Financial Services],” said Pallav Mohapatra, MD and CEO, Central Bank of India.
Mr. Mohapatra said the bank was aiming to bring down the net NPA ratio to 6% by March from 9.36% at the end of December. This would help the bank to come out of the restrictions imposed under PCA.
“If we grow the net advances by ₹8,000 crore and made recovery of ₹4,000 crore in the fourth quarter, then our net NPA will fall below 6%,” he said.
After posting profit for the third consecutive quarter, the bank is on course to make profit for the full financial year 2019-20, after a gap of five years. The last time when the bank made profit for the full financial year was in 2014-15.
