The operating expenses of the bank increased 7%, causing 41% dip in the operating profit to Rs 508.84 crore in Q2FY2019. The asset quality of the bank remained under pressure with elevated fresh slippages of loans in Q2FY2019. Thus, the provisions for bad loans remained higher, pushing the bank into losses.
The loan book of the bank has dipped 5%, while the deposits declined 1% end September 2018 over September 2017. However, the bank has improved CASA deposit ratio to 43.5% in Q2FY2019.
Asset quality remains under pressure: Bank continued to witness higher fresh slippages of advances, while large write off of bad loans helped to contain deterioration in asset quality.
Business Highlights:
Business volume declines: Business of the bank declined 2% yoy to Rs 469881 crore at end September 2018. Deposits fell 1% to Rs 295692 crore, while the advances dipped 5% to Rs 174189 crore at end September 2018.
The credit-deposit ratio declined to 58.9% at end September 2018 from 59.6% a quarter ago and 61.6% a year ago.
CASA ratio improves: CASA ratio of the bank increased to 43.5% at end September 2018 compared with 40.2% at end September 2017. CASA deposits with the bank increased 7% to Rs 128640 crore, driven by 8% growth in the saving account deposits to Rs 115361 crore at end September 2018. Current deposit rose 1% to Rs 13279 crore at end September 2018. Bank has reduced high cost deposits to 0.3% at end September 2018 from 3.9% a year ago.
Retail loans driving credit growth: The retail advances of the bank increased 8% to Rs 48301 crore. However, the MSE credit declined 9% to Rs 33741 crore, while the agriculture credit also dipped 5% to Rs 36827 crore. Further, the corporate credit book slipped 11% to Rs 55320 crore at end September 2018.
Network expansion: Bank has total branch network of 4666 branches and ATMs network of 4611 ATMs at end September 2018 up from 4715 branches and 5239 ATMs at end September 2017.
Book Value per share stood at Rs 49.7 per share at end September 2018. The adjusted book value (net of NNPA and 25% of restructured advances) was negative Rs 4.3 per share at end September 2018.
Quarterly Performance:
NII declines, as credit-deposit ratio declines: Interest income of the bank declined 8% to Rs 5685.05 crore in Q2FY2019, while interest expended dipped 10% to Rs 4009.55 crore. NII fell 2% to Rs 1675.50 crore in the quarter ended September 2018. NIM of the bank improved to 2.62% in Q2FY2019 from 2.61% in the previous quarter and 2.43% in the corresponding quarter last year. However, the credit-deposit ratio dipped to 58.9% end September 2018.
Non-interest income dips: Other income of the bank declined 30% to Rs 511.95 crore in the quarter ended September 2018, driven by 72% dip in treasury income to Rs 59 crore. Meanwhile, the core fee income of the bank also declined 6% to Rs 360 crore. The forex income rose 3% to Rs 34 crore, but recoveries in written off accounts plunged 48% to Rs 57 crore in Q2FY2019.
The net total income declined 10% to Rs 2187.45 crore in the quarter ended September 2018.
Expense ratio up: Operating expenses increased 7% to Rs 1678.61 crore, on the back of 2% surge in employee expenses to Rs 1016.52 crore, while the other operating expenses increased 16% to Rs 662.09 crore. The expense ratio increased to 76.7% in the quarter under review from 64.4% in Q2FY2018.
Operating profit plunged 41% to Rs 508.84 crore in Q2FY2019.
Provisions remains higher: The provisions and contingencies rose 1% to Rs 1982.82 crore, as the investment provisions zoomed 69% to Rs 441 crore in Q2FY2019. The loan losses provision declined 10% to Rs 1629 crore, while the bank has written back standard asset provisions worth Rs 239 Crore in Q2FY2019.
With the overall rise in provisions, the bank has posted pre-tax loss of Rs 1473.98 crore in the quarter ended September 2018.
The bank has written back tax provisions of Rs 550.38 crore, helping to reduce net losses to Rs 923.60 crore in the quarter ended September 2018.
Half Yearly Financial Performance:
For the half year ended September 2018 (H1FY2019), the bank has recorded net loss of Rs 2445.85 crore. The net interest income improved 10% to Rs 3353.68 crore, while non-interest income dipped 48% to Rs 724.91 crore in H1FY2019. The expense ratio increased to 78.1% in H1FY2019 compared to 70.2% in H1FY2018. The operating expenses increased 2% to Rs 3186.14 crore, while provision and contingencies jumped 47% to Rs 4751.05 crore. The pre-tax losses came in at Rs 3858.60 crore in H1FY2019. The bank has written back tax provisions of Rs 1412.75 crore, helping to reduce net loss to Rs 2445.85 crore in H1FY2019.
Central Bank of India: Financial Results
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