Central Bank of India posted a loss in the second quarter as the bank set aside four times more money as a cover against potential loan losses.
In the July to September quarter, the public sector bank reported a net loss of Rs 1,509 crore compared with a net profit of Rs 330 crore, a year ago.
The bank’s provisions quadrupled to Rs 2,049 crore in the quarter from Rs 427 crore, a year ago.
BAD LOANS
Rajeev Rishi, Chairman and Managing Director, expressed hope that the current high provisioning would be a one-off thing.
“We do expect and hope that some of the accounts (about Rs 2,400 crore) will get upgraded…so we will not have the same performance next quarter,” Rishi, who took charge of the bank in August, said.
About a fifth of the bank’s non-performing loans came from the infrastructure sector, reflecting teething issues with the sector in the country.
The bank’s gross non performing loans grew to 6.47 per cent as a percentage of total advances (5.54 per cent in the same period last year). The power sector, textile and aviation were the other sectors contributing to the bank’s rising bad loans.
As on September, the bank had a total non performing loan base of Rs 11,563 crore. Accounts worth Rs 2,570 crore slipped into the bad loan category in the three month period ended September.
The bank expects loans worth another Rs 2,000 crore to slip into the bad loan category in the remaining two quarters of the year.
On being asked what the bank is doing to stem the bad loan problem, Rishi said, “Whole energies have been directed towards recoveries. We have formed regional office committees to focus on recoveries and the top management is looking at what has been recovered every week.”
He also added that the recoveries are the only thing that will get the bank back on track.
Shares of the bank ended 3.76 per cent down at Rs 56.30 on the BSE .
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