Central Bank of India — Q4 FY26 earnings call

Call held 30 Apr 2026

Management summary

Central Bank reported robust business growth and significant asset quality improvements for FY26, with total business up 15.60% and Gross NPA falling to 2.67%. Full-year net profit rose 15.43% to INR4369 crores. However, Q4 profitability was impacted by a one-time deferred tax asset adjustment of INR632 crores and lower treasury income, leading to a decline in Q4 net profit and ROA. The bank maintains a strong capital base and is prepared for the ECL transition.

Highlights

  • Total business grew by 15.60% to INR812,439 crores, driven by 13.38% deposit growth and 18.76% gross advances growth.

  • Asset quality showed significant improvement with Gross NPA at 2.67% (down 51 bps YoY) and Net NPA at 0.49% (down 6 bps YoY).

  • Provision Coverage Ratio (PCR) stood strong at 96%.

  • Full-year Net Profit increased by 15.43% to INR4369 crores, despite a one-time DTA impact of INR632 crores.

  • Capital Adequacy Ratio (CRAR) improved to 17.91%, indicating a strong capital base for future growth.

Concerns

  • Q4 net profit decreased to INR724 crores from INR1,034 crores YoY, primarily due to a one-time impact of INR632 crores from deferred tax asset recognition.

  • Operating profit for Q4 was down due to lower treasury income (INR9 crores vs. over INR300 crores in previous quarter) and lower recovery in written-off accounts (INR352 crores vs. over INR1000 crores in previous quarter).

  • Q4 ROA declined to 0.56% from 0.91% in the previous year's Q4, and ROE dropped to 8.43% from 13.40% in the previous year's Q4, impacted by the DTA adjustment.

Key financials

2 periods

Headline

  • Total Business
    ₹8.12L Cr
    YoY +15.6%
  • Deposits
    ₹4.68L Cr
    YoY +13.4%
  • Gross Advances
    ₹3.45L Cr
    YoY +18.8%
  • Net Profit (FY)
    ₹4,369 Cr
    YoY +15.4%
  • Operating Profit (FY)
    ₹8,479 Cr
    YoY +4.4%
  • Net Interest Margin (NIM)
    3.1%
  • Gross NPA
    2.7%
  • Net NPA
    0.49%
  • CASA Ratio
    47.3%
  • CRAR
    17.9%
  • Provision Coverage Ratio (PCR)
    96%
  • Slippage Ratio (FY)
    1.2%
  • ROA (FY)
    0.89%
  • ROE (FY)
    13%
  • Cost to Income Ratio
    58.6%

Q4

  • Net Profit
    ₹724 Cr
  • Operating Profit
    ₹2,096 Cr
    YoY +4.6%
  • Net Interest Income
    ₹4,002 Cr
    YoY +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.

Capital allocation

high confidence
  • Dividend ₹1.2/share (final)
    And we have declared dividend also. Total dividend declared is at the rate of 12%, INR1.20 per equity share for FY 2025-26, and it includes all the interim dividend declared and paid at the rate 2% quarterly for previous 3 quarters.
  • Liquidity Liquidity disclosed Liquidity Coverage Ratio (LCR) was maintained at 210% in the previous year, indicating strong liquidity.
    Previous year, we maintain liquidity coverage ratio at 210% and CD also, we have closed by 73.90%. There is ample scope for advances and also liquidity we are having, which can support our growth.

Guidance & targets

Asset Quality

  • Slippage Ratio Asset Quality · next year · High confidence <1%
    And for next year, we have given guidance that we are going to keep it less than 1%.

    — Kalyan Kumar

Credit Growth

  • Advances Growth Credit Growth · current year · High confidence 14-16%
    We have given guidance of 14% to 16% in credit side growth.

    — Kalyan Kumar

Deposit Growth

  • Deposit Growth Deposit Growth · current year · High confidence 10-12%
    So that's why we are sure that guidance which we have given for business growth of 14% to 15% for current year and deposit growth by 10% to 12% and advances growth by 14% to 16%, we are going to achieve all this guidance.

    — Kalyan Kumar

Business Mix

  • RAM vs Corporate Mix Business Mix · current year · High confidence 65%-35% plus/minus 5%

    From 58%:32% today

    See, we have given the guidance of 65%-35% plus/minus 5% and we are maintaining this current year also, this year, 58% : 32% is the ratio. We are going to maintain this guidance, 65%: 35% plus/minus 5%.

    — Kalyan Kumar

Profitability

  • Net Interest Margin (NIM) Profitability · next year · High confidence >3%
    We have given direction that we are going to remain above 3%.

    — Mukul Dandige

Provisioning

  • ECL Additional Provisioning Cost Provisioning · ongoing basis · Medium confidence INR600-650 crores
    So based on all these things, we estimate that around INR600 crores to 650 crores would be the total financial cost for an ongoing additional provision so that will be easily balanced out of the new tax regime thing.

    — Mukul Dandige

Taxation

  • New Tax Regime Benefit Taxation · ongoing · Medium confidence INR600-800 crores
    But that one impact that my transition to new tax regime itself is likely to give me a positive impact of around INR600 crores to INR800 crores. So these 2 impacts can easily be balanced.

    — Mukul Dandige

Recovery

  • Recovery from Written-off Accounts Recovery · this year · High confidence INR2,200-2,500 crores
    Similarly, INR2,200 crores to INR2,500 crores easily we can recover from written-off account this year also and coming 2-3 years is not going to be a challenge for us.

    — Kalyan Kumar

What to watch in Q1 FY27

Slippage Ratio

next year
Current 1.16% (FY26)
Target <1%

Why it matters

Tracking the slippage ratio against management's guidance will indicate continued asset quality improvement.

And for next year, we have given guidance that we are going to keep it less than 1%.

Risks & concerns

  • One-time DTA impact on profitability

    medium

    A one-time impact of INR632 crores due to recognition of deferred tax asset at 25% against 35% affected Q4 profitability ratios.

    Management acknowledged

  • Slippages in MSME and government-backed schemes

    medium

    Some Q4 slippages, particularly in MSME, were attributed to technical reasons (auditors' observations) and MUDRA/PMEGP accounts, contributing to INR1,301 crores in slippages.

    Management acknowledged

  • ECL transition impact on profitability

    medium

    The ECL transition is estimated to incur an ongoing additional provision cost of INR600-650 crores, but management believes it will be balanced by the new tax regime benefit of INR600-800 crores and strong capital base.

    Management acknowledged

  • Impact of Middle East crisis on asset quality

    low

    Management stated no stress signals or overdue requests from customers related to the Middle East crisis have been observed, with active risk management.

    Management downplayed

Q&A highlights

7 direct, 1 evasive
Decline in Q4 profitability and asset quality Direct
First of all, regarding reduction in profit you talked about operating profit, it has grown by 4.3%. But if we compare on a quarter-on-quarter basis, yes, actually, it was mainly due to 2 reasons. One was actually regarding AFS mark-to-market. And that actually, if you see treasury income, previous quarter, it was more than INR300 crores. And this quarter, it is INR9 crores. And also recovery in written off account. You see recovery in written of account previous quarter, it was more than INR1000 crores that is INR1062 crores. But this quarter, it is only INR352-odd crores.

Analyst questioned the Q4 decline in operating profit and rise in absolute NPAs, despite overall FY improvements, prompting management to explain one-off factors.

Asked by Ashok Ajmera

Preparedness for ECL guidelines and impact on profitability Direct
See, we are actually for since last at least 1 or 2 years, sincerely working towards developing models, improving quality of data and also our strategy of financing also and containment of slippages and all which I told, these things are going to really support us in migrating to the ECL side. And as regards our impacting on profitability side, looking at our growth and net profit and profitability, I don't find any challenge in migrating to the ECL framework as of 1st April '27.

Analyst sought clarity on the bank's readiness for new ECL norms and potential impact on future profitability, a key regulatory change.

Asked by Ashok Ajmera

Technology development and spending Evasive
This, I would like to provide you offline.

Management declined to provide detailed information on technology strategy and spending during the call, suggesting it might be a sensitive area or not ready for public disclosure.

Asked by Ashok Ajmera

Credit growth pipeline and targets Direct
See our CRAR is 17.91% with CET1 15.61%. Our capital is not a constraint for meeting our growth aspiration in credit side. We have given guidance of 14% to 16% in credit side growth. And with the current capital strength, we will be able to meet this expectation -- aspiration, which bank is visualizing.

Analyst inquired about the bank's future credit growth strategy and pipeline, which is crucial for revenue expansion.

Asked by Ashok Ajmera

Recovery forecast from written-off assets for current year Direct
Recovery, actually, see, we are having INR32,000-plus crores in technical written-off account. And this year also as you can see INR2,270 crores have been recovered in written-off account. And previous quarter was more than INR1,100 crores. Similarly, INR2,200 crores to INR2,500 crores easily we can recover from written-off account this year also and coming 2-3 years is not going to be a challenge for us.

Analyst sought specific targets for recovery from written-off assets, a key component of asset quality improvement and profitability.

Asked by Sushil C. Choksey

Reason for Q-o-Q NIM improvement Direct
See, there is one item. We got a refund of INR431 crores in income tax interest as income tax interest. So that has also contributed towards improving the NIM on a quarter-on-quarter basis. This we accounted for in March '26 quarter. But excluding this item also, the NIM has not been much impacted. I mean it was 2.96% in last quarter. It is around 2.89% or 2.9% in this quarter.

Analyst questioned the Q-o-Q NIM improvement despite earlier commentary on marginal decline, revealing a one-time income tax refund as a contributing factor.

Asked by Ashlesh Sonje

NIM trajectory for next year given strong CASA/LCR and deposit competition Direct
We have given direction that we are going to remain above 3%. And in that way, CASA and rightly said by you, liquidity is not a concern for us. Previous year, we maintain liquidity coverage ratio at 210% and CD also, we have closed by 73.90%. There is ample scope for advances and also liquidity we are having, which can support our growth.

Analyst probed on the sustainability of NIM given competitive pressures and the bank's strong liquidity position, a critical factor for future profitability.

Asked by Siddharth

Net profit after adjusting one-off items (DTA impact, tax refund) Direct
INR724 crores plus INR632 crores, minus INR431 crores. So INR925 crores.

Analyst sought to understand the underlying Q4 profitability by adjusting for the one-time DTA impact and the income tax refund, providing a clearer picture of operational performance.

Asked by Pranay

2 min read 6 chapters

Detailed narrative

Robust Business and Credit Growth

Central Bank of India achieved a total business growth of 15.60% for FY26, reaching INR812,439 crores. This was supported by a 13.38% increase in deposits to INR467,923 crores and a significant 18.76% growth in gross advances to INR344,516 crores. The bank's CD ratio improved to 73.80%, reflecting efficient deployment of funds. Retail advances grew by 25.67% to INR103,533 crores, agriculture by 17.60% to INR61,687 crores, and MSME by 17.06% to INR69,351 crores, indicating broad-based growth across key segments.

Significant Asset Quality Improvement

The bank demonstrated substantial improvement in asset quality, with Gross NPA reducing by 51 basis points year-on-year to 2.67% and Net NPA improving by 6 basis points to 0.49%. The Provision Coverage Ratio (PCR) stood at a healthy 96%. The slippage ratio for the full year improved to 1.16% from 1.45% in the previous year, attributed to enhanced asset quality management processes and technology-driven monitoring. Management aims to keep the slippage ratio below 1% for the next year.

Profitability Impacted by One-time Items in Q4

While full-year net profit increased by 15.43% to INR4369 crores, Q4 net profit declined to INR724 crores from INR1,034 crores in the prior year's Q4. This was primarily due to a one-time impact of INR632 crores from the recognition of deferred tax assets at a revised rate. Q4 operating profit also saw a decline, mainly due to lower treasury income (INR9 crores compared to over INR300 crores in the previous quarter) and reduced recovery from written-off accounts (INR352 crores versus over INR1000 crores previously).

Capital Adequacy and Future Growth Outlook

The bank maintains a strong capital base with a CRAR of 17.91% and Tier 1 capital of 15.61%, which management states is not a constraint for meeting growth aspirations. Guidance for the current year includes 14-16% credit growth and 10-12% deposit growth. The bank expects to maintain its Net Interest Margin (NIM) above 3% and continue its focus on RAM (Retail, Agriculture, MSME) segments, targeting a 65%-35% mix with corporate advances.

ECL Transition and Tax Regime Benefits

Central Bank is actively preparing for the transition to ECL (Expected Credit Loss) framework by April 1, 2027, by developing models and improving data quality. Management estimates an ongoing additional provision cost of INR600-650 crores due to ECL. However, this is expected to be balanced by a one-time positive impact of INR600-800 crores from migrating to the new tax regime (25% from 35%), which will provide additional income.

Strategic Initiatives and Digital Adoption

The bank is focusing on strengthening its deposit franchise through product design, leveraging lead district responsibilities, and government business cells. Digital integration is a key focus, with accounts being opened through Tab for customer convenience. Initiatives like outreach programs for MSME, retail, and agriculture, along with setting up corporate finance branches and sales & marketing teams, are aimed at augmenting credit growth and improving resource diversification.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Financial Services earnings calls