Central Bank of India — Q3 FY26 earnings call

Call held 16 Jan 2026

Management summary

Central Bank of India delivered a strong Q3 FY26 with record net profit and robust business growth, driven by significant advances in both RAM and corporate segments. Asset quality improved notably with reduced NPAs and a high PCR. While some key metrics like NIM and Cost-to-Income missed guidance, the bank has initiated strategic measures, including targeted campaigns and digital adoption, to address these areas and maintain its positive trajectory.

Highlights

  • Total business grew by 15.77% to INR 7.74 lakh crore.

  • Net profit reached an all-time high of INR 1,263 crore, increasing by 31.70%.

  • Gross NPA improved by 116 basis points to 2.70%, and Net NPA improved by 14 basis points to 0.45%.

  • Provision Coverage Ratio (PCR) is strong at 96.69%.

  • CD ratio improved by 375 basis points to 72%.

  • Recovery in written-off accounts was INR 1,026 crore this quarter.

Concerns

  • CASA, NIM, and Cost-to-Income ratio did not meet market guidance (NIM 2.96% vs >3%, Cost-to-Income 57.84% vs <56%).

  • Higher provisioning this quarter due to ECL transition (INR 375 crore) and Labor Code (INR 150 crore).

  • SME segment growth is lagging behind Retail and Agriculture.

Key financials

  1. Net Profit ₹1,263 Cr +31.7%YoY
  2. Gross Advances ₹3.24L Cr +19.5%YoY
  3. Total Business ₹7.74L Cr +15.8%YoY
  4. Gross NPA 2.7%
  5. Net NPA 0.45%
  6. ROE 14.5%
  7. ROA 1%
  8. CASA Ratio 47.1%

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
    ₹2.23L Cr Advances17.9% Growth
  • Corporate
    ₹1.00L Cr Advances23.2% Growth
  • Retail
    20% Growth
  • Agriculture
    15% Growth
  • MSME
    16% Growth

Capital allocation

high confidence
  • Liquidity Liquidity disclosed Capital Adequacy Ratio (CAR) is 16.13%, with CET1 at 13.87% and Tier 2 at 2.26%. The Leverage Ratio is 5.63%. Liquidity Coverage Ratio (LCR) is 203%.
    Capital adequacy ratio is 16.13%, within which CET1 is 13.87%, and Tier 2 is 2.26%, and our leverage ratio is 5.63%. (Page 4) liquidity coverage ratio, if you can see, it is 203% also. (Page 17)

Guidance & targets

Credit Growth

  • Undisbursed sanctioned credit book Credit Growth · remaining weeks of FY26 · High confidence INR 1,13,000 crore plus
    I can assure you that in the remaining weeks also, we will take decisions, and looking to the undisbursed part of already sanctioned proposal, I am sure that the target of INR 1,13,000 crore plus credit book, we are going to achieve that. We are confident about it.

    — Kalyan Kumar

  • Total credit target Credit Growth · FY26 · High confidence INR 3,40,000 crore
    Total credit target INR 3,40,000 crore.

    — Kalyan Kumar

CASA Mobilization

  • CASA through 'Aagaz' campaign CASA Mobilization · ongoing · High confidence INR 20,000 crore
    We have started a campaign which is named as "Aagaz" and we are expecting INR 20,000 crore through this campaign in CASA side.

    — Kalyan Kumar

Profitability

  • Net Interest Margin (NIM) Profitability · FY26 · High confidence 3%

    Previously >3% → 3%

    We are going to maintain 3% guidance which we have given to the market.

    — Kalyan Kumar

  • Return on Equity (ROE) Profitability · FY26 · High confidence above 1%
    And ROA we will maintain above 1% as we have given guidance to the market. It is going to be above 1%. Towards RAM side, it is our priority, and Central Bank of India is having strength in this segment.

    — Kalyan Kumar

  • Return on Assets (ROA) Profitability · FY26 · High confidence above 1%
    And ROA we will maintain above 1% as we have given guidance to the market.

    — Kalyan Kumar

Efficiency

  • Cost-to-Income Ratio Efficiency · 2 to 3 years · Medium confidence below 50%

    Previously <56% → below 50%

    it may another 2 years to 3 years to take it below 50%.

    — Kalyan Kumar

  • CD Ratio Efficiency · Q4 FY26 · High confidence 73%-74%

    From 72% today

    See, the target which we have fixed for this quarter, March Q4 quarter, our CD ratio would be approximately 73% to 74%.

    — Kalyan Kumar

Recovery

  • Total recovery and upgradation Recovery · Q4 FY26 · High confidence INR 904 crore
    In Q4, expected recovery and upgradation and recovery in technical write-off, it is INR 904 crore. Total recovery and upgradation expected in Q4 is INR 904 crore.

    — Kalyan Kumar

Cost of Funds

  • Cost of deposits Cost of Funds · by June 2026 · High confidence 4.65%-4.70%
    So, we expect that by June, when the rate transmission is complete, our cost of deposit should further come down to around 4.65%-4.70% kind of a range.

    — Mukul Dandige

Yield

  • Yield on advances Yield · Q4 FY26 · High confidence 8.15%
    Current yield on advances is 8.15%. And hopefully, we will maintain this 8.15% in Q4.

    — Kalyan Kumar

Provisioning

  • ECL Provisioning Provisioning · by 1st April 2027 · High confidence INR 2,675 crore more (to reach INR 4,200 crore total)
    total estimation is INR 4,200 crore. INR 2,675 crore more approximately we have to make provision for achieving this target. By 1st April 2027, I am sure with the profitability we are going to make very easily we will migrate to ECL.

    — Kalyan Kumar

What to watch in Q4 FY26

CASA Ratio Improvement

next quarter (Q4 FY26)
Current 47.13%
Target Further improvement from 'Aagaz' campaign

Why it matters

CASA is a key driver for lower cost of funds and NIM expansion.

We have also taken steps for actually segment-wise product design... we have started a campaign which is named as "Aagaz" and we are expecting INR 20,000 crore through this campaign in CASA side.

Risks & concerns

  • NIM Compression

    medium

    NIM guidance was above 3%, but achieved 2.96% due to pressure on margin from rate cuts.

    Management acknowledged

  • Cost-to-Income Ratio Not Meeting Guidance

    medium

    Cost-to-income guidance was less than 56%, but achieved 57.84%; target to bring it below 50% will take 2-3 years.

    Management acknowledged

  • Lagging MSME Growth

    medium

    MSME segment growth (16%) is lagging behind Retail and Agriculture, prompting new strategic initiatives.

    Analyst acknowledged

  • Elevated GNPA in Agri and MSME

    low

    Gross NPA ratio in Agri and MSME sectors remains elevated, but management states it's not a significant impact and corrective actions are in place.

    Analyst acknowledged

Q&A highlights

7 direct
Credit and Deposit Growth Trajectory Direct
Earlier, in previous quarter, you must have observed our total loan book, 72% were belonging to RAM side, and 28% was corporate side, and growth rightly as said by you. So, what we did for RAM segment, Retail Agriculture and MSME segment, for retail, agri, MSME, we started outreach program... Towards corporate lending side also, we started conducting credit approval committee meeting every week... I can assure you that in the remaining weeks also, we will take decisions, and looking to the undisbursed part of already sanctioned proposal, I am sure that the target of INR 1,13,000 crore plus credit book, we are going to achieve that.

Addresses analyst's concern about muted growth in previous quarters and outlines strategies for robust credit and deposit growth, providing specific targets.

Asked by Ashok Ajmera

Higher Provisioning and its Reasons Direct
Ajmera ji, see, INR 375 crore we have provided for ECL. ... Second is, for the first time if DCCO extension happens because of that there will be a provision. So there, we have a provision of around INR 50 crores. So, these are the two major reasons.

Clarifies the reasons behind the higher provisioning this quarter, attributing it to proactive ECL transition and DCCO extension.

Asked by Ashok Ajmera

Impact of Revised Labor Code on Employee Costs Direct
No, no. We have a liaison with Labor Code. Proactively, we have done this provision of additional INR 150 crore. ... There will no impact on our personnel because as they are saying they are going to reduce it five years to one year, we do not have that kind of structure in the Bank.

Addresses concerns about rising employee costs and the potential impact of the new Labor Code, stating proactive provisioning and minimal future impact.

Asked by Ashok Ajmera

Achievement of CASA, NIM, and Cost-to-Income Guidance Partial
It may take time. Actually, I can't assure by March '26 because there is pressure on margin due to rate cut, and though we are diversifying revenue sources and cost settlement, we have taken several steps, but it may another 2 years to 3 years to take it below 50%.

Management acknowledges missing guidance for these metrics and provides a longer timeline for achieving the Cost-to-Income target, while reaffirming the NIM target despite rate pressures.

Asked by Nishita

Corporate Loan Book Growth Drivers Direct
It is broad-based actually. Because you see, in corporate side, year-on-year growth is 23%. And we have given sanction from head office in this year from different committees. It is INR 1,17,000 crore. ... Demand for credit side, majorly the sectors where we entered, this is renewable energy sector, LRD, and also opportunity towards infrastructure, road side also, and data center also.

Explains that the strong corporate loan growth is broad-based and driven by specific high-growth sectors, indicating strategic focus.

Asked by Ishank Gupta

Lagging MSME Growth and Future Strategy Direct
MSME, we have grown by 16%. So, as rightly said by you that MSME, we have actually whatever we are having aspiring to grow, it didn't match that. But we have initiated steps that I would like to share with you. We have identified 225 MSME intensive branches in the active clusters, and we have designed cluster-specific products.

Acknowledges the underperformance in MSME and details specific initiatives (intensive branches, cluster-specific products, digital journeys, outreach) to boost growth in this segment.

Asked by Ishank Gupta

Cost of Deposits Trajectory and NIM Maintenance Direct
So, we expect that by June, when the rate transmission is complete, our cost of deposit should further come down to around 4.65%-4.70% kind of a range... But for maintaining that NIM, we have already diversified... CASA mobilization, we have started very strategically. And also RAM advances, where we are having, particularly MSME and agriculture, we are having good margin.

Provides a clear timeline and target for the reduction in cost of deposits and explains the multi-pronged strategy to maintain NIM despite rate cuts.

Asked by Varun

Capital Adequacy for Growth and Equity Dilution Direct
To meet our target, desired target in Q4, this capital is enough, sufficient to meet this growth target. Whatever we are aspiring, INR 3,40,000 crore is the credit advances target. Easily we will achieve. There is no need of going to market for either for Tier 1 capital.

Reassures investors that current capital levels are sufficient to support targeted credit growth without the need for equity dilution.

Asked by Tanya Kothary

2 min read 6 chapters

Detailed narrative

Robust Business and Credit Growth

Central Bank of India reported a strong Q3 FY26, with total business growing by 15.77% to INR 7.74 lakh crore. Gross advances increased by 19.48% year-on-year to INR 3,23,531 crore, driven by 17.89% growth in RAM (Retail, Agriculture, MSME) to INR 2,23,000 crore and 23.18% growth in corporate advances to INR 1,00,365 crore. The bank attributes this growth to strategic outreach programs for RAM and weekly credit approval meetings for corporate lending, with INR 1,17,000 crore sanctioned by head office committees this year.

Significant Profitability Improvement

The bank achieved an all-time high net profit of INR 1,263 crore, marking a 31.70% increase. Return on Assets (ROA) stood at 1.01%, and Return on Equity (ROE) improved by 151 basis points to 14.47%. This strong performance was supported by a 12.62% increase in total income to INR 10,968 crore, despite some pressure on Net Interest Margin (NIM) at 2.96% and Cost-to-Income ratio at 57.84%.

Enhanced Asset Quality and Proactive Provisioning

Asset quality showed significant improvement, with Gross NPA reducing by 116 basis points to 2.70% and Net NPA improving by 14 basis points to 0.45%. The Provision Coverage Ratio (PCR) remains robust at 96.69%. The bank proactively made provisions of INR 375 crore for the upcoming ECL transition and an additional INR 150 crore for the revised Labor Code, demonstrating a cautious approach to future liabilities. Slippage during Q3 was contained at INR 658 crore.

Strategic Initiatives for CASA and Cost Management

While CASA growth was 8.54% to INR 2.11 lakh crore, the bank aims to boost it further with the 'Aagaz' campaign, targeting INR 20,000 crore. The Cost-to-Income ratio, at 57.84%, missed the sub-56% guidance, but management expects to bring it below 50% within 2-3 years through diversification of revenue sources and cost settlement. The bank also anticipates its cost of deposits to come down to 4.65%-4.70% by June 2026 due to repricing and CASA growth, from the current 4.75%.

Focus on MSME and Digital Transformation

Acknowledging that MSME growth (16%) lagged other RAM segments, the bank has identified 225 MSME-intensive branches, designed cluster-specific products, and plans further outreach programs in Q4 FY26. Digital capabilities, including a mobile app ('Cent eeZ') and a 'GoNoGo' app for initial loan proposal screening, are being leveraged to improve customer experience, enhance underwriting quality, and support growth across all segments. These technological interventions are expected to strengthen asset quality in agriculture and MSME sectors.

Capital Adequacy and Future Outlook

The Capital Adequacy Ratio stands at 16.13% (CET1 at 13.87%), which management deems sufficient to support the targeted credit growth of INR 3,40,000 crore without the need for equity dilution. The bank is confident in maintaining its ROE and ROA above 1% and expects the CD ratio to reach 73%-74% by Q4 FY26, from the current 72%. Total ECL provisioning is estimated at INR 4,200 crore, with INR 2,675 crore remaining to be provided by April 2027.

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