CRISIL Ratings has upgraded its rating on the existing long-term debt instruments of Central Bank of India (Central Bank) to 'CRISIL AA-/Stable' from 'CRISIL A+/Positive' and assigned its 'CRISIL AA-/Stable' rating to Tier II bonds (under Basel III) and 'CRISIL A+/Stable' rating to Tier I bonds (under Basel III).
CRISIL Ratings has withdrawn its rating on Rs.139.1 crore perpetual Tier I bonds (under Basel II) on the company's request as the outstanding against the same is nil and on receipt of confirmation from debenture trustee. The withdrawal is in line with CRISIL Ratings withdrawal policy.
The rating upgrade factors in the sustained improvement in the profitability of the bank. Asset quality metrics have also witnessed a significant downtrend.
The bank has been profitable for eight consecutive quarters (since the first quarter of fiscal 2022). Profit after tax (PAT) increased to Rs 1,582 crore for fiscal 2023 (return on assets [RoA] of 0.40%) from Rs 1,045 crore (RoA of 0.28%) for fiscal 2022. This trend should sustain driven by expected lower credit cost because of lesser incremental stress as focus will remain on maintaining asset quality.
Slippages in fiscal 2023 were 2.4% compared to 3.0% in fiscal 2022. Reported gross non-performing assets (NPAs) also fell sharply to 8.4% as on March 31, 2023, from 14.8% a year earlier, supported mainly by write-offs and partly by recoveries. Net NPAs also declined to 1.8% from 3.9%. As on March 31, 2023, restructured advances accounted for 3.1% of the portfolio (4.6% a year earlier).
The capital position has also improved, supported by timely equity infusion by the majority stakeholder, the Government of India (GoI), and internal accrual. Between fiscals 2018 and 2021, the government infused Rs 19,903 crore which resulted in a substantial improvement in the capital adequacy of the bank. Supported by internal accrual, the capital adequate ratio (CAR) was 14.1% as on March 31, 2023. With continued profitability, the capital position is expected to remain adequate.
The Reserve Bank of India (RBI) took Central Bank out of its prompt corrective action (PCA) in September 2022.
The ratings continue to reflect the expectation of strong support from the GoI and the adequate resource profile of the bank. The strengths are partially offset by average, albeit improving, asset quality and earnings.
Shares of Central Bank of India was last trading in BSE at Rs. 26.74 as compared to the previous close of Rs. 26.75. The total number of shares traded during the day was 408879 in over 1692 trades.
The stock hit an intraday high of Rs. 26.89 and intraday low of 26.47. The net turnover during the day was Rs. 10905559.00.