Central Bank of India Q2 Results October 17: Profit Up 21% on Strong NII

Central Bank of India put out its September-quarter numbers on Saturday, October 17, and the headline is clean: net profit up 21.1% year-on-year to ₹1,469 crore, against ₹1,213 crore in Q2 of last year. The Central Bank of India Q2 results also showed profit rising 10.95% from ₹1,324 crore in the June quarter. What makes this quarter interesting isn’t the profit line, though. It’s how hard the bank is pushing loans compared with how fast deposits are coming in.

Central Bank of India Q2 results: where the profit came from

Core income did the heavy lifting. Net interest income (NII), the gap between interest earned and interest paid, rose 26.3% year-on-year to ₹4,146 crore from ₹3,283 crore, and 5.9% over the June quarter’s ₹3,914 crore. Interest earned on advances alone went up 27.6% to ₹7,231 crore, according to Business Standard’s breakdown of the results.

Net interest margin improved to 3.01% from 2.89% a year ago. The reason is on the funding side: cost of deposits fell 28 basis points to 4.60%, which more than covered a 49 basis point drop in yield on advances to 7.87%.

Operating profit climbed to ₹2,268 crore from ₹1,786 crore, roughly 27% higher. Cost-to-income improved to 58.95% from 62.42%, as per the bank’s press release filed with BSE.

Other income was the weak spot. Non-interest income fell 6.06% to ₹1,380 crore, and treasury income dropped 31.2% to ₹128 crore. So this was not a bond-gains quarter. The growth came from lending.

Provisions went up, bad loans went down

Total provisions and contingencies, which include income tax, rose 39.4% year-on-year to ₹799 crore from ₹573 crore, though they were 7.3% lower than the June quarter’s ₹862 crore. Inside that number, provisions for bad loans rose to ₹490 crore from ₹143 crore and standard-asset provisions jumped to ₹379 crore from ₹30 crore, partly offset by a ₹336 crore write-back on investments.

Asset quality kept improving all the same:

• Gross NPA ratio: 2.39%, down from 2.60% in June and 3.01% a year ago.
• Net NPA ratio: 0.31%, down from 0.49% in June and 0.48% a year ago.
• Provision coverage ratio: 97.16%.
• Fresh slippages: ₹734 crore, lower than ₹939 crore in the June quarter. The non-annualised slippage ratio was 0.24%.

Annualised credit cost, however, rose 32 basis points year-on-year to 0.53%. Cleaner books, but the bank is setting aside more for the loans it’s writing now.

Loans are running well ahead of deposits

Global advances grew 29.83% to ₹3,81,032 crore. Corporate advances rose 42.05% to about ₹1.19 lakh crore, while retail, agriculture and MSME (RAM) advances grew 21.11%. Total domestic deposits, by contrast, grew 14.41% to ₹5,08,509 crore.

That gap shows up in two ratios. The credit-deposit ratio rose to 75.02% from 66.20% a year ago, and the CASA ratio (low-cost current and savings deposits as a share of the total) slipped 218 basis points to 44.65%. A bank lending twice as fast as it gathers deposits eventually has to pay up for funds, and that would test the margin gains we saw this quarter.

Capital isn’t a constraint for now. The capital adequacy ratio stood at 17.68%, with Tier I at 15.97%, up from 17.34% a year earlier. For the first half of FY27, net profit rose 17.25% to ₹2,793 crore.

What to watch next

Because the results landed on a Saturday, Monday’s session will be the first chance for the stock to react. Our read: the earnings quality is decent, with profit driven by NII rather than treasury, and both NPA ratios are lower than last quarter and last year. The open question is funding. If CASA keeps sliding while advances grow near 30%, margins may not hold at 3%. For how other lenders fared, see our take on IDBI Bank’s Q2 numbers and PNB’s Q2 results, and our guide on how to analyse quarterly results.

Disclaimer: This article is for information only and is not investment advice or a recommendation to buy or sell any security. Figures are from the bank’s exchange filing and the linked report. Consult a SEBI-registered investment adviser before making investment decisions.