Central Bank of India Q2 Profit Climbs 21% on Strong Interest Income

Central Bank of India, a government-owned financial institution, revealed a 21.1 percent year-on-year increase in net profit for the second quarter of fiscal year 2027, reaching ₹1,469 crore. This compares with ₹1,213 crore reported during the same period last year. The rise was largely supported by robust growth in the bank's net interest income, despite facing higher provisioning and a drop in treasury income.

Sequentially, the bank's net profit advanced by 10.95 percent from ₹1,324 crore in the preceding quarter. For the first half of FY27, the bank posted a 17.25 percent jump in net profit to ₹2,793 crore, up from ₹2,382 crore in the prior year.

Net interest income (NII) was a key contributor to these gains, increasing 26.3 percent year-on-year to ₹4,146 crore from ₹3,283 crore in Q2 FY26. On a quarter-on-quarter basis, NII also rose 5.9 percent from ₹3,914 crore in the first quarter of FY27. This growth was driven by an 18.45 percent rise in interest income, which reached ₹10,357 crore, boosted by a 27.6 percent increase in interest earned on advances to ₹7,231 crore. Meanwhile, interest expenses rose 13.7 percent to ₹6,211 crore.

Additionally, the bank’s net interest margin (NIM) improved to 3.01 percent from 2.89 percent a year ago. The cost of deposits decreased by 28 basis points to 4.60 percent, which balanced out a 49 basis point decline in yield on advances, now at 7.87 percent.

Operating profit grew by 26.99 percent year-on-year to ₹2,268 crore from ₹1,786 crore, as the rise in net interest income offset a decline in non-interest income. Sequentially, operating profit was up 3.75 percent from ₹2,186 crore. Non-interest income dropped 6.06 percent year-on-year to ₹1,380 crore, mainly due to a 31.2 percent decrease in treasury income to ₹128 crore from ₹186 crore. Profit from investment sales declined 30 percent to ₹133 crore, and the bank recorded a loss of ₹87 crore on investment revaluation, compared to a ₹51 crore loss a year earlier.

Recoveries from written-off accounts and other receipts decreased 8.2 percent to ₹617 crore, while fee-based income rose 3.9 percent to ₹635 crore.

Provisions and contingencies, including income tax, increased sharply by 39.4 percent year-on-year to ₹799 crore from ₹573 crore previously, although they fell 7.3 percent sequentially from ₹862 crore. Provisions for non-performing assets (NPAs) surged to ₹490 crore from ₹143 crore, and provisions on standard assets climbed to ₹379 crore from ₹30 crore. These increases were partly offset by a ₹336 crore write-back on investments, including security receipts. The tax provision declined from ₹259 crore to ₹236 crore.

Operating expenses rose 9.8 percent year-on-year to ₹3,258 crore, with staff costs increasing 9.5 percent to ₹2,072 crore and other operational expenses up 10.5 percent to ₹1,186 crore. The bank’s cost-to-income ratio improved to 58.95 percent, down from 62.42 percent a year ago.

On the asset quality front, the bank saw improvement. The gross NPA ratio dropped to 2.39 percent by the end of September from 2.60 percent in June and 3.01 percent a year ago. The net NPA ratio also declined to 0.31 percent from 0.49 percent in the previous quarter and 0.48 percent a year earlier. Gross NPAs stood at ₹9,109 crore as of September 30, compared with ₹8,827 crore a year earlier and ₹9,225 crore in June. Net NPAs decreased to ₹1,146 crore from ₹1,364 crore in the same period last year. The provision coverage ratio improved to 97.16 percent from 95.86 percent in June and 96.88 percent a year ago.

Fresh slippages were reduced to ₹734 crore during the quarter from ₹939 crore in Q1 FY27, with the slippage ratio at 0.24 percent on a non-annualized basis, down 6 basis points year-on-year. However, the annualized credit cost rose by 32 basis points year-on-year to 0.53 percent.

Business expansion was notable, with global advances growing 29.83 percent year-on-year to ₹3.81 trillion, and global deposits increasing 14.41 percent to ₹5.09 trillion. The total global business rose 20.54 percent to ₹8.90 trillion. Corporate advances surged 42.05 percent to ₹1.19 trillion, while advances in retail, agriculture, and micro, small and medium enterprises (MSMEs) increased 21.11 percent to ₹2.54 trillion. Retail loans grew 24.49 percent, including a 13.07 percent rise in housing loans and a 13.09 percent increase in automobile loans.

The current account savings account (CASA) ratio declined by 218 basis points to 44.65 percent, while the credit-deposit ratio increased to 75.02 percent from 66.20 percent a year ago.

The bank maintained a strong capital position, with a capital adequacy ratio of 17.68 percent at the end of September, compared to 17.34 percent a year earlier and 18.28 percent in June. The Common Equity Tier-I ratio improved to 15.97 percent from 14.98 percent a year ago.

This performance reflects Central Bank of India's steady growth in core banking operations, supported by disciplined asset quality management and cautious provisioning. The bank’s ability to expand lending while controlling costs and improving capital buffers is aligned with broader trends in the Indian banking sector, where emphasis on asset quality and profitability remains critical amid evolving macroeconomic conditions.