Central Bank of India — Q1 FY26 earnings call

Call held 21 Jul 2025

Management summary

Central Bank of India delivered a landmark performance in Q1 FY26, crossing the 1% RoA threshold and achieving record net profits. The bank demonstrated exceptional asset quality with NNPA falling below 0.5% and slippages contained at 0.35%. While corporate credit growth was intentionally moderated due to pricing discipline, the bank is pivoting towards high-yield RAM segments and digital co-lending to drive a guided 14-16% credit growth for the full year.

Highlights

  • Net Profit reached ₹1,169 crores, marking one of the highest ever quarterly profits for the bank.

  • Return on Assets (RoA) improved to 1.02% from 0.82% in the previous year's June quarter.

  • Net NPA (NNPA) significantly reduced to 0.49% from 0.73% YoY, with Gross NPA at 3.13%.

  • Net Interest Margin (NIM) stood at 3.16%, with management guiding to maintain it above 3%.

  • Total business grew by 10.84% YoY to ₹7.04 lakh crore, driven by 11.41% growth in deposits.

  • RAM (Retail, Agri, MSME) portfolio showed robust growth of 15.71% YoY.

  • Capital Adequacy Ratio (CRAR) improved to 17.66% with Tier 1 capital at 15.48%.

  • Cost-to-Income ratio improved to 55.43% from 57.71% in the previous year.

Key financials

  1. Net Profit ₹1,169 Cr
  2. NIM 3.2%
  3. RoA 1%
  4. NNPA 0.49%
  5. CASA Ratio 46.9%
  6. CRAR 17.7%

What they filed

Q1 FY27: revenue up 12.8%, net profit up 3.2% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue8,235 8,542 8,653 8,623 8,777 +7%9,070 +6%9,698 +12%9,726 +13%
Net profit926 966 1,106 1,284 1,234 +33%1,265 +31%748 −32%1,325 +3%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • RAM (Retail, Agri, MSME)
    15.7% Growth72.1% Share of Advances
  • Corporate
    — Growth0 reduction noted Status

Guidance & targets

Volume

  • Overall Credit Growth Volume · FY26 · High confidence 14% to 16%
    We are targeting around 14% to 16%. That is what the guidance we have given. So, we will continue with that 14% to 16% we should be able to achieve.

    — M. V. Rao, MD & CEO

  • Co-lending Disbursement Volume · per quarter · Medium confidence ₹2,800 to ₹3,000 crores

    Previously ₹2,000 crores → ₹2,800 to ₹3,000 crores

    That number is going to increase because we have further plans for the co-lending. So, that is going to increase at least by Rs. 2,800 crores to Rs. 3,000 crores.

    — M. V. Rao, MD & CEO

Margin

  • NIM Margin · FY26 · High confidence above 3%
    And our guidance is that we'll stay above 3% as far as the NIMs is concerned. And we'll ensure that our NIMs stay above 3%.

    — Vivek Wahi, Executive Director

Profitability

  • RoA Upside from Tax Regime Profitability · FY27 · Medium confidence 9 to 10 bps
    next year onwards, it should give us a positive side of roughly around Rs. 900 crores, which will mean that around 9 to 10 bps of my ROA will get impacted, that is by plus side.

    — Vivek Wahi, Executive Director

Risks & concerns

  • Pricing Pressure in Corporate Segment

    medium

    Corporates are demanding lending rates below 6%, which is below the bank's investment yield of 6.71%.

    Management acknowledged

  • MCLR Transmission and NIM Compression

    medium

    Potential for 60-70 bps MCLR cuts in Q2 could compress margins if deposit costs don't fall proportionately.

    Analyst acknowledged

  • Slippage from SMA-0 Accounts

    low

    SMA-0 increased from ₹221 cr to ₹537 cr, but management states these are already regularized/upgraded.

    Analyst downplayed

Q&A highlights

3 direct
Deliberate Slowdown in Corporate Credit Direct
It is a very conscious decision from our side that we do not want to lend at the rates what the corporates were demanding... there is no point in giving that 5.85%-5.80% just to show the topline.

Explains why credit growth (9.97%) lagged the FY26 target (14-16%) in Q1, highlighting a focus on profitability over volume.

Asked by Ashok Ajmera

Deferred Tax Asset (DTA) and Tax Transition Direct
We estimate that whatever the DTA on account of business losses, that we should be able to consume entirely by Q4... we should be able to move to the new tax regime.

Provides a clear timeline for tax normalization which will significantly boost net profit and RoA in FY27.

Asked by Ashok Ajmera

ECL Provisioning Strategy Direct
So, we are continuing to build around Rs. 250 crores required for the ECL... all in all, it is going to strengthen the balance sheet even more.

Confirms the bank is proactively building buffers (₹1,000 cr total so far) despite having very low current NPAs, indicating conservative accounting.

Asked by Ashok Ajmera

2 min read 5 chapters

Detailed narrative

Record Profitability and RoA Milestone

Central Bank of India achieved a significant milestone in Q1 FY26 with its Return on Assets (RoA) crossing the 1% mark to reach 1.02%. Net profit for the quarter stood at ₹1,169 crores, one of the highest in the bank's history. This performance was driven by a 15.60% increase in operating profit, which reached ₹2,304 crores, and a substantial 53.30% jump in non-interest income to ₹1,786 crores.

Asset Quality Reaches Best-in-Class Levels

The bank's asset quality continued its sharp upward trajectory, with Net NPA (NNPA) dropping to 0.49% from 0.73% YoY. Gross NPA also saw a major reduction to 3.13% from 4.54%. Management highlighted a very low slippage ratio of 0.35% and a credit cost of 0.68%, supported by a high Provision Coverage Ratio (PCR) of 97.02%.

Strategic Shift Toward High-Yield RAM Segments

Management is deliberately pivoting away from low-yield corporate lending, where rates were being demanded below 6%. Instead, the bank is focusing on the RAM (Retail, Agri, MSME) portfolio, which grew by 15.71% YoY and now constitutes 72.07% of total advances. Retail assets specifically saw 17.51% growth, while MSME grew by 15.94%.

Digital Acceleration and Co-lending Expansion

The bank is aggressively scaling its digital footprint, with 12 lakh new customers onboarded via the 'Cent eeZ' app. Co-lending is becoming a key growth driver, with management raising its quarterly disbursement target to ₹2,800-3,000 crores from the current ₹2,000 crore level. The average yield on these co-lending assets is approximately 9%.

Capital Strength and Future Tax Benefits

The bank's capital position is robust with a CRAR of 17.66% and a Tier 1 ratio of 15.48%, providing ample room for the guided 14-16% credit growth. Furthermore, the bank expects to fully consume its Deferred Tax Assets (DTA) by Q4 FY26, facilitating a move to the new tax regime in FY27, which is projected to add 9-10 basis points to the RoA.

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