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ICRA upgrades ratings of Central Bank of India to 'AA-' with 'stable' outlook

10-Jun-25 13:31 Hrs IST

ICRA stated that the upgrade in the long-term ratings of Central Bank of India (CBI) factors in the sustained improvement in itssolvency1 profile, capital position and profitability levels, in line with ICRA's expectations.

The bank's asset quality also improved with the reduction in the fresh non-performing advances (NPA) generation rate and the legacy stressed assets. Though the bank increased its provision coverage ratio (PCR) and undertook additional provisioning on the standard restructured book, credit costs declined, leading to higher profitability in FY2025.

CBI's capital profile was further strengthened by the capital raise of Rs. 1,500 crore in FY2025.

The ratings continue to factor in CBI's sovereign ownership, with the Government of India's (GoI) shareholding at 89.27%, as well as the demonstrated capital support over the years.

Moreover, with the higher provision on legacy stressed assets, the overall net NPAs (NNPAs) remained on a downward trajectory. CBI's dependence on capital from the GoI in the near term remains limited, though the impact of the transition to provisioning based on the expected credit loss (ECL) framework will remain monitorable.

Further, the ratings continue to consider CBI's well-established deposit franchise with a robust current account and savings account (CASA) base that also augments its strong liquidity profile, leading to a competitive cost of interest-bearing funds in relation to the public sector banks' (PSB) average.

ICRA notes that CBI's profitability has been supported by healthy recoveries from its stressed assets (including written-off accounts). Its ability to maintain the same, while keeping the fresh NPA generation rate in check, would be key for profitability.

Central Bank of India is a mid-sized public sector bank (PSB) and the eighth largest, in terms of assets, among PSBs. It had a market share of 1.5% in advances and 1.8% in deposits in the Indian banking sector as on 31 December 2024.

For the year ended 31 March 2025, CBI reported a profit of Rs. 3,785 crore on a total asset base of Rs. 4.75 lakh crore compared to a net profit of Rs. 2,549 crore on a total asset base of Rs. 4.42 lakh crore for the year ended 31 March 2024.

The scrip shed 0.40% to currently trade at Rs 40.19 on the BSE.