NPA spike led to loss, sees growth in FY13: Central Bank

Public sector lender Central Bank of India posted dismal results in Q4, with a net loss of Rs 105 crore in the quarter ended March 2012. The company attributed the losses to a spike in non-performing assets (NPAs).

In an interview with CNBC-TV18, MV Tanksale, Chairman and Managing Director of Central Bank of India, said that the high slippages in Q4FY12 at Rs 3300, is mainly due to some corporate accounts. The NPA rise was also caused due to two-three major accounts on the steel & agriculture sector, explained Tanksale. The bank has also completed transition to system based NPA recognition, informed Tanksale. He also stressed on the requirement for high provisioning due to restructure assets. Despite the bank’s poor performance in the fourth quarter, Central Bank is looking to return strong earnings in FY13. Central Bank of India has posted a net loss at Rs 105 crore for the January-March quarter of 2012 as against profit of Rs 133 crore in a year ago period.
Gross NPAs increased at 4.83% in the fourth quarter as against 3.69% in Q3FY12. Gross NPAs stood at Rs 7,273 crore versus Rs 4,922 crore during the same period. Net NPAs too jumped at 3.09% versus 2.04% quarter-on-quarter. Net interest income of the bank too declined 11.5% to Rs 1,264 crore from Rs 1,428 crore YoY. Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video. Q: This is a bit of a nasty jar that you should have reported losses in Q4. Is it entirely because of the higher provisioning? Can you take us through what happened? A: You should appreciate the courage of the CEO where we committed that we shall complete 100% system driven NPA identification. But, to add to it, various economic challenges have put some more accounts into the kitty of the NPAs and that’s why I took a call. You will appreciate that the total loss for the quarter is Rs 105, but you should see that the operating profit for the quarter has been very robust. The operating profit for the year is also positive. It's only below the line where I have paid heed that it is better that I provide and correct the situation going forward. Q: So, it’s that Rs 870 crore of provisions that have hurt the bottom line. Can you also take us through the NPL picture, in one quarter they have gone up from Rs 4900 crore odd to Rs 7270 crore. What caused this? Are there one or two big ticket items? What is this increased NPL comprised of? A: Let me tell you that the major components again come from the complete 100% system driven NPA. But there are two, three major accounts on the steel sector and the agri sector, which have really hurt me. Again, I feel that there is a propensity for them to come back. Q: Can you tell us what the situation is in the current quarter? Would you think that Q4, the worst is over, or are there still one or two big restructured items or NPLs that might figure in Q1 of FY13? A: I am very confident that probably there is nothing now which will have a shocking effect on my numbers in Q1. Most of the accounts have been addressed properly. The last 9 months have been really put into account monitoring by the CEO of the bank. Q: What is the amount of loans that slipped in Q4, your slippages in? A: Its Rs 3,300 crore.