/** blogpostTitle: Central Bank of India Q1 FY27: Growth stays strong, asset quality improves, fee income turns volatile */

Central Bank of India Q1 FY27: Growth stays strong, asset quality improves, fee income turns volatile

Central Bank of India opened FY27 with a quarter that reinforced the core turnaround narrative: faster balance sheet growth, stable margins above the stated threshold, and continued improvement in headline asset quality. For the quarter ended 30 June 2026, the bank reported standalone net profit of INR 1324 crore, up 13.26% year on year. Net interest income rose 15.70% to INR 3914 crore, supported by strong loan growth and a lower cost of deposits.

The quarter also showed where the next leg of execution needs to come from. Total income grew only 3.08% to INR 10678 crore despite a 12.84% rise in interest income. The drag came from non-interest income, which declined 44.27% year on year to INR 987 crore, reflecting weaker treasury income and lower recoveries in written-off accounts. This creates a clear near-term focus area: sustaining fee income and reducing volatility outside the core interest engine.

Growth remains broad-based, led by a low-base corporate rebound

The bank ended the quarter with global business of INR 833320 crore, up 18.29% year on year. Deposits increased 11.68% to INR 478972 crore and advances rose 28.58% to INR 354348 crore. CASA remained a key strength at 46.61% of total deposits, though it was marginally lower than 46.88% a year ago.

On the loan book, growth was not limited to a single engine. The retail book rose 23.92% to INR 105523 crore. Agriculture grew 21.14% to INR 64274 crore and MSME increased 18.03% to INR 71308 crore. Corporate credit expanded sharply by 46.52% to INR 112770 crore. Management attributed the steep corporate growth primarily to a low base and highlighted renewables, data centres and HAM projects as areas of traction.

The mix shift is visible in the RAM to corporate split. RAM fell to 68.13% from 72.07% in the prior year quarter as corporate gained share, but the bank remained within its guidance band of a 65:35 ratio with a plus or minus 5% tolerance.

Financial summary (standalone)

Margins steady above guidance, but non-interest income needs rebuild

Central Bank of India held its NIM at 3.06% in Q1 FY27, slightly lower than 3.16% in Q1 FY26. The quarter saw a meaningful reduction in the cost of deposits to 4.60% from 4.93%, and the cost of funds declined to 4.65% from 4.95%. This helped offset lower yields on advances, which fell to 7.89% from 8.58% year on year.

Management stated that the bank aims to improve yields through a shift in product focus, especially gold loans and SHG-related lending. It also said the overall yield could move towards 8% by March 2027, driven by higher-yielding segments.

Where the quarter looked weaker was non-interest income. Fee-based income increased 9.93% year on year to INR 487 crore, but treasury income fell to INR 276 crore from INR 664 crore, and other receipts including recovery in written-off accounts declined to INR 224 crore from INR 664 crore.

Management outlined specific actions to improve fee income. These included a centralized BG cell, a centralized forex cell, and stronger cross-sell through marketing hires and relationship coverage. The bank also discussed board approvals for new verticals, including a credit card vertical and wealth management.

Asset quality continues to improve, with slippages and credit cost trending down

The asset quality trend remained supportive. Gross NPA declined to 2.60% from 3.13% a year ago and net NPA stayed at 0.49%. In absolute terms, gross NPAs were INR 9225 crore on advances of INR 354348 crore.

The NPA movement table showed slippages of INR 939 crore in Q1 FY27, with recoveries and upgrades broadly offsetting additions. Slippage ratio in the presentation was 0.29% for the quarter.

Sector-wise, retail credit continued to show relatively low stress, with retail GNPA at 1.00% and retail NNPA at 0.19%. Agriculture and MSME remained higher-risk segments, with agriculture GNPA at 5.82% and MSME GNPA at 5.19%.

Provisioning trends were also favourable. Total provisions declined 24.05% year on year to INR 862 crore, helping the bank deliver profit growth even as operating profit declined.

PCR including technical write-offs was 95.86% in June 2026, down from 97.02% in June 2025. Excluding technical write-offs, PCR was 81.41%.

Capital, liquidity and ECL transition

The bank reported a comfortable capital position. CRAR improved to 18.28% with CET1 at 16.54% and leverage ratio at 6.33%. Management said it has no immediate plan to raise capital, despite board approval to raise up to INR 7000 crore through equity or Basel III instruments.

Liquidity metrics moved lower. Average LCR declined to 156.49% from 235.08% and NSFR declined to 128.25% from 146.90%. Management described this as liquidity optimisation, arguing that very high liquidity buffers carry cost and that the bank remains above internal and regulatory thresholds.

A key forward-looking element from the call was the expected credit loss transition. Management stated that Stage 1 and Stage 2 provisions of INR 1525 crore have been made out of an estimated total requirement of INR 4500 to 5000 crore. It indicated an intent to shift to ECL from 1 April 2027 and suggested the capital impact could be around 80 basis points if taken at once.

Digital push and GIFT City entry add strategic optionality

The bank continues to push digital and distribution initiatives as part of its transformation agenda. Digital transactions through alternate delivery channels rose to 91.57% for Jul 25 to Jun 26, up from 87.19% in the prior period. UPI transactions increased from 38844.17 to 57792.92 (transactions in lakhs, as presented).

The Cent eez digital onboarding platform reported onboarding of 44.50 lakh customers. The bank also introduced onboarding using foreign mobile numbers, aimed at NRI and overseas customers. For SMEs and corporates, Cent eez Vyapaar Saathi was launched in March 2026, with reported achievements of 4000 plus customers onboarded and over INR 950 crore of successful transactions.

The other strategic development was the IFSC Banking Unit at GIFT City. The presentation lists milestones from RBI approval in Aug 2025 to operations starting in June 2026. It discloses IBU capital of USD 20 million, a treasury book of USD 50 million, advances sanctioned of USD 50 million and profit of USD 0.49 million as of 30 June 2026. The bank also articulated a five-year goal of USD 200 million deposits and a USD 500 million credit book.

Takeaways

Central Bank of India began FY27 with strong business momentum and improving asset quality. The bank is broadly tracking its stated guidance on growth, NIM above 3% and asset quality thresholds on net NPA, while gross NPA remains slightly above its below 2.50% target.

The quarter also clarified what needs to improve next. Non-interest income remains volatile, and management is relying on structural steps like centralized forex and BG cells, marketing build-out, and new verticals to rebuild fee income. If these levers deliver, the bank has room to sustain profitability even as margins remain sensitive to mix and competitive pressure.