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3QFY2012 Result Update | Banking

February 1, 2012

Central Bank of India


Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT 3QFY12 1,179 614 113 2QFY12 1,396 797 244 % chg (qoq) (15.6) (22.9) (53.6) 3QFY11 1,432 815 404 % chg (yoy) (17.7) (24.7) (71.9)

REDUCE
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 5,480 1.2 170/63 198,068 10 17,194 5,199 CBI.BO CBOI@IN

`85 `79
12 Months

Source: Company, Angel Research

For 3QFY2012, Central Bank of India reported disappointing results with a 53.6% qoq and 71.9% yoy dip in its net profit, due to disappointing operating performance as well as higher provisioning expenses. Even the sluggish PAT was aided by reversal of earlier years tax provision of `112cr. Disappointment on the asset-quality front continued with elevated slippages and ballooning restructuring. We recommend Reduce on the stock.
NIM dips; Asset quality remains under stress: The banks business growth was moderate during 3QFY2012, with advances growing by 4.0% qoq (up 14.6% yoy) and deposits almost flat sequentially (up 15.4% yoy). Overall CASA deposit growth was rather slow at 7.3% yoy, leading to a sharp 244bp yoy fall in CASA ratio to 32.5%. The banks reported NIM fell by a rather steep 47bp qoq to 2.53% on the back of a 15bp qoq fall in yield on advances and a 9bp rise in cost of deposits. The bank had to reverse interest income of `110cr on NPAs recognized on switchover to the system-based NPA recognition platform, which partly exacerbated the fall in NIM. Asset quality deteriorated during 3QFY2012 as well, with gross NPA ratio rising to 3.7% (2.9% in 2QFY12) and net NPA ratio climbing to over 2.0% (1.4% in 2QFY12). Slippages for 3QFY2012 stood at a steep `1,464cr (annualized slippage ratio of 4.5%) compared to an average quarterly run-rate of `540cr over the past six quarters. A late starter in CBS implementation, the bank commenced the switchover to NPA-based recognition system only post 1QFY2012. The bank will switchover for accounts of `5lakhs and below in 4QFY2012. The bank also restructured loans amounting to over `3,600cr during 3QFY2012 alone and took a hit of ~`250cr for NPV loss on a telecom account, which got restructured during the quarter. Outlook and valuation: At the CMP, the stock is trading at 0.8x FY2013E ABV compared to its trading range of 0.61.5x with a median of 1.1x since its listing in 2007. However, we believe this is outweighed by the substantial near-term concerns on the asset quality. While the stock has corrected substantially over the past year, it is still trading higher than some of the other mid-size PSU banks with a better asset-quality outlook and return ratios. Hence, we recommend a Reduce rating on the stock with a target price of `79. Key financials
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%)
Source: Company, Angel Research

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 80.2 8.7 2.6 8.5

Abs. (%) Sensex Central BoI

3m (2.9) (21.9)

1yr (6.2) (42.0)

3yr 82.4 156.1

FY2010 2,545 14.2 998 85.3 1.6 24.7 3.5 0.8 0.6 25.4

FY2011 5,325 109.2 1,121 18.3 2.8 27.7 3.1 0.7 0.6 23.2

FY2012E 5,164 (3.0) 652 (35.2) 2.4 10.1 8.5 0.9 0.3 9.5

FY2013E 5,882 13.9 1,007 43.8 2.5 15.6 5.5 0.8 0.4 11.4

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Please refer to important disclosures at the end of this report

Central Bank of India | 3QFY2012 Result Update

Exhibit 1: 3QFY2012 performance


Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Recov. from written off a/cs - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Provisions for Investments - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

3QFY12 2QFY12 % chg (qoq) 3QFY11 % chg (yoy) 4,741 3,547 1,120 75 3,563 1,179 357 284 148 73 34 102 1,536 922 641 281 614 486 428 52 6 127 14 113 11.2 4,910 3,618 1,088 205 3,513 1,396 324 279 144 45 50 85 1,721 924 647 277 797 431 392 74 (35) 366 122 244 33.2 (3.4) (2.0) 3.0 (63.4) #DIV/0! 1.4 (15.6) 10.2 1.8 2.8 62.2 (32.0) 19.8 (10.7) (0.2) (0.9) 1.4 (22.9) 12.9 9.2 (29.7) (118.1) (65.2) (88.3) (53.6) (2,206)bp 3,933 2,947 961 24 0 2,501 1,432 250 207 152 43 45 10 1,681 866 626 241 815 190 127 47 16 625 221 404 35.4 20.6 20.3 16.5 208.6 (100.0) 42.4 (17.7) 43.2 37.7 (2.6) 69.8 (24.4) 974.2 (8.6) 6.5 2.4 16.9 (24.7) 156.1 237.0 10.6 (60.1) (79.6) (93.6) (71.9) (2,426)bp

Exhibit 2: Actual vs. Angel estimates


Particulars (` cr) NII Non-Interest Income Operating Income Operating Expenses Pre-Prov. Profit Provisions & Cont. PBT Prov. for Taxes PAT
Source: Company, Angel Research

Actual 1,179 357 1,536 922 614 486 127 14 113

Estimates 1,426 311 1,737 930 807 473 334 97 237

Variation (%) (17.3) 14.8 (11.6) (0.8) (24.0) 2.8 (61.9) (85.3) (52.3)

February 1, 2012

Central Bank of India | 3QFY2012 Result Update

Exhibit 3: 3QFY2012 performance analysis


Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) Credit cost (%)
Source: Company, Angel Research

3QFY12

2QFY12

% chg (qoq)

3QFY11 % chg (yoy) 14.6 15.4 (48)bp (6.9) 10.7 7.3 (244)bp 110bp 164bp 143bp 97bp (8)bp (92)bp 851bp 80.6 135bp 229.9 133bp (2,227)bp 347bp 51bp

133,317 128,235 188,226 188,286 70.8 10,076 51,004 61,080 32.5 12.9 7.8 7.1 11.4 7.2 2.5 60.0 4,922 3.7 2,669 2.0 48.1 4.5 0.8 68.1 12,717 49,071 61,788 32.8 12.8 7.9 7.0 11.6 7.1 3.0 53.7 3,840 2.9 1,755 1.4 56.8 3.8 0.7

4.0 116,309 (0.0) 163,109 272bp (20.8) 3.9 (1.1) (37)bp 10bp (11)bp 9bp (15)bp 10bp (47)bp 634bp 28.2 75bp 52.1 67bp (873)bp 68bp 5bp 71.3 10,823 46,084 56,907 34.9 11.8 6.1 5.7 10.5 7.2 3.5 51.5 2,725 2.3 809 0.7 70.3 1.0 0.3

Moderate business growth


The banks business growth was moderate during 3QFY2012, with advances growing by 4.0% qoq (up 14.6% yoy) and deposits almost flat sequentially (up 15.4% yoy). Volatile current account deposits declined sharply by 20.8% qoq and 6.9% yoy. Saving account deposits growth though moderate was relatively better at 3.9% qoq and 10.7% yoy. Overall CASA deposit growth was rather slow at 7.3% yoy. Consequently, CASA ratio fell sharply by 244bp yoy (rather modest fall of 37bp qoq) to 32.5%. The share of high-cost bulk deposits and CDs stood rather high at 32.8% in 3QFY2012 as compared to 28% in 3QFY2011 and 32.9% in 2QFY2012.

Exhibit 4: Moderate growth in business in 3QFY2012


Adv. qoq chg (%) 15.0 10.0 71.3 72.3 67.8 68.1 Dep. qoq chg (%) CDR (%, RHS) 80.0 70.8 70.0 60.0

Exhibit 5: CASA deposits growth slowing down


CASA ratio (%) 36.0 22.1 34.5 33.0 13.0 14.7 6.9 7.3 CASA yoy growth (%, RHS) 30.0 25.0 20.0 15.0 10.0 5.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12
Source: Company, Angel Research

11.5 10.0

5.0

1.7 1.3

2.3

34.9

35.2

32.6

32.8

(2.8)

(2.8)

(0.0)

(5.0)

40.0

30.0

3QFY11 4QFY11 1QFY12 2QFY12 3QFY12


Source: Company, Angel Research

February 1, 2012

32.5

3.6

4.0

50.0

31.5

Central Bank of India | 3QFY2012 Result Update

NIM falls sharply, partly due to reversal of `110cr of interest income of technical slippages
The banks reported NIM fell rather steeply by 47bp qoq to 2.53% on the back of a 15bp qoq fall in yield on advances and a 9bp rise in cost of deposits. The bank had to reverse interest income of `110cr on NPAs recognized on switchover to the system-based NPA recognition platform, which partly exacerbated the fall in NIM.

Exhibit 6: Decline in yield on advances...


(%) 12.00 11.50 11.00 10.50 10.00 9.50 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 10.47 10.60 11.37 11.59 11.44

Exhibit 7: ...coupled with rise in CoD led to fall in NIM


(%) 3.50 3.00 2.50 2.00 1.50 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 3.45 3.47 2.99 3.00 2.53

Source: Company, Angel Research

Source: Company, Angel Research

Treasury income rises sharply; OI ex-treasury growth also healthy


Treasury income of the bank for the quarter rose to `73cr vis--vis `45cr in 2QFY2012 and `43cr in 3QFY2011. Recoveries from written-off accounts were sluggish, declining by 32% qoq and 24.4% yoy to `34cr. Growth in other income excluding treasury was sharp at 37.7% yoy at `284cr.

Asset quality continues to disappoint


The banks asset quality deteriorated during 3QFY2012 as well, with gross NPA ratio rising to 3.7% (2.9% in 2QFY2012) and net NPA ratio climbing to over 2.0% (1.4% in 2QFY2012). Slippages for 3QFY2012 stood at steep `1,464cr (annualized slippage ratio of 4.5%) compared to `1,244cr in 2QFY2012 and an average quarterly run-rate of `540cr over the past six quarters.

Exhibit 8: Slippages shoot up


Slippages (%) 5.0 4.0 3.0 2.0 1.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 0.3 0.5 0.4 0.7 Credit cost (%, RHS) 0.8 1.0 0.8 0.6 0.4

Exhibit 9: Asset quality deteriorates considerably


Gross NPAs (%) 2.5 2.0 1.5 1.0 70.3 67.6 Net NPAs (%) PCR (%, RHS) 80.0 65.2 56.8 48.1 70.0 60.0 50.0 40.0 30.0 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12
Source: Company, Angel Research; Note: PCR including tech. write-offs

1.0

2.3

1.8

3.8

4.5

2.3 0.7

1.8 0.7

2.3 0.9

2.9 1.4

Source: Company, Angel Research

February 1, 2012

3.7 2.0

0.2

0.5

Central Bank of India | 3QFY2012 Result Update

A late starter in CBS implementation, the bank commenced the switchover to NPA-based recognition system only post 1QFY2012. The bank had switched over all accounts worth `10lakhs and above as of 1HFY2012. During the quarter, the bank implemented system-based NPA recognition for accounts between `5lakhs-10lakhs and plans to switchover the remaining accounts in 4QFY2012. Management attributed slippages of ~`600cr on account of the switchover exercise. In 2QFY2012, management had indicated that accounts below `5lakhs were around `24,000cr. These accounts are expected to be migrated in 4QFY2012, considering that smaller accounts are more prone to being thrown as NPAs by system-based NPA recognition; asset quality could continue to see further stress in 4QFY2012 as well. Management is hopeful of achieving normalized levels of NPAs only by 2QFY2013. Apart from the elevated level of slippages, the bank also restructured loans amounting to over `3,600cr during 3QFY2012. Management indicated that these accounts largely pertained to the telecom and telecom tower, shipping and cement sectors. As a result of sharply higher restructuring, the bank had to accelerate the provisioning, which resulted in provisioning expenses rising steeply by 156% yoy to `486cr. The bank took a hit of ~`250cr towards NPV loss for a large account pertaining to the telecom sector, which got restructured during the quarter.

Investment concerns
Low branch productivity and structurally higher opex structure
The bank suffers from low branch and employee productivity in terms of business per branch as well as business per employee. Business per branch for FY2011 was ~34% lower than large and medium PSU peer banks. Due to this, the bank suffers from higher operating expenses, as reflected in opex-to-average assets ratio of ~1.6% during FY200911.

Near-term concerns on asset quality


All PSU banks have completed the switchover to system-based NPA recognition in 2QFY2012. Central Bank of India due to its huge branch network got delayed in converting all its branches to the CBS platform and, hence, started the switchover to NPA-based recognition system only post 1QFY2012. The bank switched over all accounts worth `5lakhs and above by 3QFY2012, which has led to spurt in slippages (average slippages of ~`1,350cr in 2QFY2012 and 3QFY2012 as compared to average quarterly run-rate of ~`420cr over the preceding six quarters. The remaining loan portfolio (`24,000cr comprising ~18% of loan book) will be switched over in 4QFY2012. Considering that smaller accounts are more prone to being thrown as NPAs by system-based NPA recognition, asset quality could continue to see further stress in 4QFY2012 as well. Also, the banks exposure to the infrastructure sector is relatively higher at 21.1% of the loans as of 3QFY2012, with the power sector accounting for over two-thirds of the same. Major constituent of power exposure has been SEBs (~9% of advances).

February 1, 2012

Central Bank of India | 3QFY2012 Result Update

Outlook and valuation


At the CMP, the stock is trading at 0.8x FY2013E ABV compared to its trading range of 0.61.5x with a median of 1.1x since its listing in 2007. However, we believe this is outweighed by the substantial near-term concerns on the asset quality. While the stock has corrected substantially over the last year, it is still trading higher than some of the other mid-size PSU banks with a better asset-quality outlook and return ratios. Also, we remain cautious on the asset-quality profile of the bank pending the switchover of the smaller accounts to the system-based platform and high exposure to the infrastructure sector. Hence, we recommend a Reduce rating on the stock with a target price of `79.

Exhibit 10: Key assumptions


Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages
Source: Angel Research

Earlier estimates FY2012 10.0 11.0 35.8 2.4 5.7 (15.0) 6.0 4.1 FY2013 13.0 12.0 36.1 2.5 1.7 5.0 5.0 2.9

Revised estimates FY2012 10.0 11.0 35.8 2.4 5.7 (15.0) 6.0 4.1 FY2013 13.0 12.0 36.1 2.5 1.7 5.0 5.0 2.9

Exhibit 11: Change in estimates


FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 6,271 1,357 7,628 3,938 3,690 1,931 1,760 571 1,189 Revised Var. (%) estimates 5,882 (6.2) 1,360 7,241 3,797 3,444 1,717 1,727 560 1,167 0.2 (5.1) (3.6) (6.7) (11.0) (1.9) (1.9) (1.9)

Earlier estimates 5,624 1,297 6,921 3,646 3,275 1,820 1,455 422 1,033

Revised Var. (%) estimates 5,164 (8.2) 1,337 6,501 3,616 2,884 1,741 1,143 331 811 3.0 (6.1) (0.8) (11.9) (4.3) (21.5) (21.5) (21.5)

February 1, 2012

Central Bank of India | 3QFY2012 Result Update

Exhibit 12: P/ABV band


Price (`) 250 200 150 100 50 0 0.3x 0.6x 0.9x 1.2x 1.5x

Nov-08

May-11

Aug-07

Dec-10

Apr-09

Jul-10

Source: Company, Angel Research

Exhibit 13: Recommendation summary


Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Neutral Buy Neutral Accumulate Neutral Neutral Buy Neutral Accumulate Accumulate Reduce Accumulate Neutral Accumulate Neutral Neutral Accumulate Neutral Accumulate Accumulate Accumulate Neutral Neutral Accumulate Reduce CMP (`) 1,088 401 497 888 23 335 164 102 755 341 48 472 85 416 69 100 227 88 811 269 956 2,077 98 71 234 70 56 Tgt. price (`) 1,361 1,061 367 907 53 528 79 450 107 877 1,036 2,359 106 75 52 Upside (%) 25.2 19.5 9.3 20.1 11.4 11.9 (7.4) 8.1 7.2 8.1 8.4 13.6 8.5 7.7 (8.2) FY2013E P/ABV (x) 1.8 1.1 3.4 1.6 1.1 2.1 0.7 0.8 1.0 1.1 0.7 0.9 0.8 0.7 0.5 0.7 0.9 0.6 0.8 0.7 1.1 1.7 0.6 0.9 1.0 0.7 0.8 FY2013E Tgt P/ABV (x) 2.2 2.0 2.3 1.3 0.8 1.1 0.8 0.8 0.7 0.9 1.2 1.9 0.7 0.7 0.7 FY2013E P/E (x) 9.4 8.7 17.3 14.0 6.9 11.1 4.6 5.0 5.8 7.2 4.9 6.0 5.5 4.5 3.6 4.9 5.4 4.6 4.7 5.9 6.0 10.1 4.1 4.6 5.9 4.8 6.4 FY2011E-13E EPS CAGR (%) 18.2 16.2 30.4 19.2 13.5 20.1 9.1 (4.8) 9.8 2.3 26.3 (7.4) (25.1) (1.8) 2.4 9.9 3.8 5.3 16.7 (5.9) 6.4 26.0 13.7 10.9 0.1 4.3 0.7 FY2013E RoA (%) 1.5 1.2 1.8 1.3 0.9 1.4 0.9 0.8 1.1 0.6 0.7 0.8 0.4 0.8 0.8 0.7 1.2 0.5 1.4 0.7 1.0 0.8 0.7 0.6 0.7 0.6 0.4 FY2013E RoE (%) 20.2 13.2 21.0 14.4 17.5 20.6 17.3 14.6 19.3 13.7 16.9 15.8 11.4 15.5 14.9 13.4 18.4 12.8 19.0 11.3 19.4 17.9 16.5 15.4 15.8 12.1 11.1

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

February 1, 2012

Mar-12

Sep-09

Feb-10

Oct-11

Jan-08

Jun-08

Central Bank of India | 3QFY2012 Result Update

Income statement
Y/E March (` cr) Net Interest Income - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%) Preference Dividend PAT avl. to Eq. SH - YoY Growth (%) FY08 2,223 (10.2) 902 60.6 3,125 2.9 1,746 3.7 1,380 2.0 528 (19.6) 852 22.5 302 35.4 550 10.5 80 470 (5.5) FY09 2,228 0.2 1,070 18.6 3,298 5.5 1,862 6.6 1,437 4.1 512 (3.0) 925 8.6 354 38.2 571 3.8 78 494 5.0 FY10 2,545 14.2 1,735 62.2 4,281 29.8 2,222 19.4 2,059 43.3 509 (0.5) 1,550 67.5 491 31.7 1,058 85.3 61 998 102.1 FY11 5,325 109.2 1,265 (27.1) 6,590 54.0 3,999 80.0 2,591 25.9 932 83.2 1,659 7.1 407 24.5 1,252 18.3 131 1,121 12.4 FY12E 5,164 (3.0) 1,337 5.7 6,501 (1.4) 3,616 (9.6) 2,884 11.3 1,741 86.8 1,143 (31.1) 331 29.0 811 (35.2) 160 652 (41.9) FY13E 5,882 13.9 1,360 1.7 7,241 11.4 3,797 5.0 3,444 19.4 1,717 (1.4) 1,727 51.1 560 32.4 1,167 43.8 160 1,007 54.5

Balance sheet
Y/E March (` cr) Share Capital - Equity - Preference Reserve & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08 1,204 404 800 4,739 110,320 33.3 449 2,432 4,812 123,956 11,537 1,302 31,455 72,997 40.9 2,320 4,344 123,956 33.3 FY09 1,321 404 917 5,091 131,272 19.0 804 3,854 5,313 147,655 11,037 1,214 43,061 85,483 17.1 2,278 4,582 147,655 19.1 FY10 1,771 404 1,367 5,921 162,107 23.5 2,751 4,575 5,545 182,672 17,012 2,205 50,563 105,383 23.3 2,343 5,165 182,672 23.7 FY11 2,021 404 1,617 6,827 179,356 10.6 7,283 5,605 8,666* 209,757 14,082 1,201 54,504 129,725 23.1 2,425 7,819 209,757 14.8 FY12E 2,264 647 1,617 9,658 199,085 11.0 8,107 6,166 8,233 233,513 12,941 3,503 63,048 142,698 10.0 2,619 8,705 233,513 11.3 FY13E 2,264 647 1,617 10,515 222,975 12.0 9,059 6,967 9,143 260,923 14,493 3,914 68,702 161,249 13.0 2,839 9,727 260,923 11.7

Note: * including Share Application Money of `2,026cr

February 1, 2012

Central Bank of India | 3QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Ratio Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Pref. Div. RoA post Pref Div Leverage RoE 2.0 0.5 1.6 0.1 1.7 0.7 2.4 1.6 0.8 0.3 0.5 0.1 0.4 38.7 16.8 1.6 0.4 1.3 0.3 1.6 0.5 2.1 1.4 0.7 0.3 0.4 0.1 0.4 41.2 15.0 1.5 0.3 1.2 0.5 1.7 0.6 2.3 1.3 0.9 0.3 0.6 0.0 0.6 42.1 25.4 2.7 0.5 2.2 0.2 2.4 0.5 2.9 2.0 0.8 0.2 0.6 0.1 0.6 40.6 23.2 2.3 0.8 1.5 0.1 1.7 0.5 2.1 1.6 0.5 0.1 0.4 0.1 0.3 32.4 9.5 2.4 0.7 1.7 0.1 1.7 0.5 2.2 1.5 0.7 0.2 0.5 0.1 0.4 28.1 11.4 7.3 1.3 2.3 7.0 1.2 2.3 3.5 0.8 2.6 3.1 0.7 4.0 8.5 0.9 1.2 5.5 0.8 2.3 11.6 65.1 2.0 12.2 74.3 2.0 24.7 105.2 2.2 27.7 126.4 3.4 10.1 95.8 1.0 15.6 105.5 2.0 3.2 1.5 1.2 0.3 54.9 2.7 1.2 1.2 0.2 54.1 2.3 0.7 1.2 0.2 70.4 1.8 0.7 1.3 0.3 67.6 4.8 2.8 4.1 0.7 45.0 5.7 3.0 2.9 0.6 50.0 36.1 66.2 10.4 5.4 33.4 65.1 13.1 7.0 34.4 65.0 12.2 6.8 35.2 72.3 11.6 6.3 35.8 71.7 12.8 8.0 36.1 72.3 12.7 7.8 2.2 55.9 0.4 16.8 1.7 56.4 0.4 15.0 1.6 51.9 0.6 25.4 2.8 60.7 0.6 23.2 2.4 55.6 0.3 9.5 2.5 52.4 0.4 11.4 FY08 FY09 FY10 FY11 FY12E FY13E

February 1, 2012

Central Bank of India | 3QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER

3QFY2012 Result Update | Banking

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment February 1, 2012 decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

Central Bank of India


Performance Highlights

Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and Particulars fundamentals and, as such, may not match with a 3QFY11on a%company's 3QFY12 2QFY12 % chg (qoq) chg (yoy) trading volume, as opposed to focusing on a company's(` cr) report fundamentals. NII 1,179 1,396 (15.6) 1,432 (17.7)
Pre-prov. the 614 (24.7) The information in this document has been printed on profitbasis of publicly available797 information, (22.9) internal data815 other reliable and sources believed to be true, but we do not represent that it is accurate or 113 complete and it should not be relied 404as such, as this on PAT 244 (53.6) (71.9) document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way Source: Company, Angel Research responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. For all the information contained within this document. Accordingly, we cannot testify, Angel Broking Limited has not independently verified3QFY2012, Central Bank of India reported disappointing results with a 53.6% qoq and 71.9% yoy contents net profit, due to disappointing operating nor make any representation or warranty, express or implied, to the accuracy,dip in its or data contained within this document. While Angel Broking Limited endeavours to update onperformance basis the information provisioning expenses. Even may sluggish PAT a reasonable as well as higher discussed in this material, there the be regulatory, compliance, or other reasons that prevent us from doing so.by reversal of earlier years tax provision of `112cr. Disappointment was aided

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, restructuring. We recommend Reduce on the stock. redistributed or passed on, directly or indirectly.

on the asset-quality front continued with elevated slippages and ballooning

Angel Broking Limited and its affiliates may seek to provide or have engaged with advances growingfinance, investment 14.6% yoy) moderate during 3QFY2012, in providing corporate by 4.0% qoq (up banking or other advisory services in a merger or specific transaction to the companies referred to(upthis report, as Overalldate of this report or in and deposits almost flat sequentially in 15.4% yoy). on the CASA deposit growth the past. was rather slow at 7.3% yoy, leading to a sharp 244bp yoy fall in CASA ratio to Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in back of a 15bp qoq fall in yield on advances and a 9bp rise in cost of deposits. connection with the use of this information.

NIM dips; Asset quality remains under stress: The banks business growth was

32.5%. The banks reported NIM fell by a rather steep 47bp qoq to 2.53% on the

The bank had to reverse interest income of `110cr on NPAs recognized on

Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer partly switchover to the system-based NPA recognition platform, which to the latest update on respective stocks for the disclosure status in the fall of those stocks. quality Broking Limited and its affiliates may have exacerbated respect in NIM. Asset Angel deteriorated during 3QFY2012 as well, investment positions in the stocks recommended in this report. ratio rising to 3.7% (2.9% in 2QFY12) and net NPA ratio climbing with gross NPA

to over 2.0% (1.4% in 2QFY12). Slippages for 3QFY2012 stood at a steep `1,464cr (annualized slippage ratio of 4.5%) compared to an average quarterly run-rate of `540cr over the past six quarters. A late starter in CBS implementation,

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Central Bank of India No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

February 1, 2012

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