Bank Profit Growth
Central Bank of India Reports 13% Profit Rise in Q1, Asset Quality Improves
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Key Points
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Net Deferred Tax Asset (DTA) stood at ₹1,624.36 crore as of 30 June 2026, down from ₹2,531.38 crore a year earlier.
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Board approved the unaudited standalone and consolidated results for the quarter, with an unmodified audit opinion.
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Gross NPAs declined sequentially by 7 basis points to 2.60% (from 2.67%), while net NPAs remained at 0.49%.
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Interest earned for the quarter rose to ₹9,691 crore, up from ₹8,589 crore a year earlier, highlighting stronger core income.
Central Bank of India posted a standalone net profit of ₹1,324 crore for Q1 FY2026-27, a 13.3% rise from ₹1,169 crore a year earlier, according to Investment Guru India. Net interest income — the core gap between what a bank earns on loans and pays on deposits — jumped 15.7% to ₹3,914 crore, driven by strong loan growth.
Despite the profit beat, investors were unimpressed. CBI shares closed down 2.8% at ₹31.70 on the BSE on July 17, the day results were announced. The market focused on a 5.1% drop in operating profit — to ₹2,186 crore from ₹2,304 crore a year ago — and a squeeze in net interest margins, Whales Book reported.
Loan Book Surges but Deposit Gap Widens Fast
CBI's global advances surged 28.6% year-on-year to ₹3.54 lakh crore. That is nearly double the bank's own full-year lending guidance of 14–16%. But deposit growth told a different story. Total deposits rose just 11.7% to ₹4.79 lakh crore, according to Whales Book.
That gap between 28.6% loan growth and 11.7% deposit growth is a red flag for analysts. To keep lending at this pace, CBI will likely need to raise deposit rates. That would squeeze interest margins further in coming quarters. The bank's CASA ratio — cheap current and savings deposits as a share of total deposits — slipped slightly to 46.61% from 46.88% a year ago.
Bad Loans Hit Multi-Year Lows, Provisions Drop Sharply
Asset quality improved meaningfully. Gross NPAs — loans where borrowers have stopped paying — fell to 2.60% from 3.13% a year ago and 2.67% last quarter. Net NPAs held steady at 0.49%. The provision coverage ratio, which measures how much of bad debt is already set aside, stood at a strong 95.86%, according to Investment Guru India.
Provisions for bad loans dropped to ₹346 crore from ₹468 crore a year earlier. Total provisions fell to ₹401.6 crore from ₹521.1 crore. That reduction in provisioning gave a significant boost to reported profit. Some market watchers argue this means profit growth is partly driven by releasing old buffers, not by stronger core earnings.
Rate Cuts Squeezed Margins, Management Blames Benchmark Lag
Net interest margin — a key measure of lending profitability — slipped 10 basis points to 3.06%. MD & CEO Kalyan Kumar explained why. "After the 125-basis-point rate cut, it immediately impacted our yields," he said. "Deposit interest rates adjust with a lag... but lending rates linked to external benchmarks are updated from the very next working day. That was the reason for the dip."
About 68% of CBI's loan portfolio sits in Retail, Agriculture, and MSME (RAM) — sectors where rates are tied to external policy benchmarks and reprice instantly. Interest earned for the quarter rose to ₹9,691 crore from ₹8,589 crore a year ago. But the cost of raising that money also rose faster, trimming the margin benefit.
Bank Eyes GIFT City, Credit Cards, and NRI Deposits for Growth
CBI opened its first offshore banking unit at GIFT City, Gandhinagar in late June. Kumar said the unit has already "canvassed business to the tune of ₹472.67 crore" since opening. The bank also plans to launch credit card products and a wealth management division in the second half of FY27 to boost fee income.
To close the deposit gap, CBI is targeting $400 million in FCNR(B) deposits — foreign currency deposits from Non-Resident Indians. It has set up 159 dedicated NRI desks and a "war room" to chase these funds ahead of the festive season. The board approved 150 new branches and 1,400 new hires this fiscal year. No dividend was declared, as the bank preserves capital for a new RBI-mandated bad-loan accounting model due in April 2027.
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