New Delhi: Public sector Central Bank of India reported a 31.68% rise in its third quarter net profit and the bank’s management said it has got a nod from the government to raise additional funds through right share issuances.
The bank’s stock rose 2.69% to Rs171.75 on the Bombay Stock Exchange at a day when the Sensex was down 0.37%.
For the quarter ended December 2010, the bank reported a net profit of Rs403.52 crore as against Rs306.44 crore a year ago. This was on the back of a healthy growth in net interest income that rose to Rs1,432 crore from Rs730 crore a year ago.
Net interest margin, a key gauge of profitability for a bank, rose substantially to 3.45% from 2.04% a year ago. However, fresh slippages or new bad debt accretion rose to Rs797 crore in the quarter against Rs542 crore a year ago.
The bank’s credit growth was at more than 27% on a year-on-year basis, whereas the deposit grew at less than 5%.
The bank’s chairman and managing director S. Sridhar said the bank has got nod from the government to issue rights share and the bank has already filed a draft prospectus with the capital market regulator Securities and Exchange Board of India (Sebi).
However, he did not elaborate on how much the bank intends to raise through the rights issue.
“We can only say we will raise enough to maintain our tier-I capital at 8%,” said Sridhar.
Central Bank of India is the only one which has got nod from the government for a rights issue. Other banks, including State Bank of India is yet to get the nod despite trying it get for some time now. The government owns more than 80% of Central Bank of India.