Central Bank of India is anticipating minimal impact on its profitability from the transition to Expected Credit Loss (ECL) accounting norms, according to Managing Director and CEO Kalyan Kumar. Kumar, who assumed leadership of the bank in September last year, outlined the institution’s key financial priorities and ongoing initiatives in a recent telephonic interview.
He highlighted the bank’s distinctive position with respect to its credit-deposit (CD) ratio and cost-to-income ratio (CIR), describing these metrics as areas of strategic focus. The CD ratio has shown improvement, rising from 66 percent to 73.80 percent, driven by robust loan growth. Kumar expressed confidence that the bank’s CD ratio would continue to improve over time as lending activity expands.
Regarding cost efficiency, the bank aims to reduce its CIR to below 50 percent within the next three years. Kumar acknowledged challenges stemming from a decline in interest income—attributable to rate cuts—as well as lower non-interest and treasury incomes. To address these pressures, the bank is implementing several cost reduction measures, including renegotiating leases and optimizing cash holdings at branches.
On the ongoing shift to ECL provisioning, the bank has already made necessary provisions in its third-quarter accounts and maintains adequate reserves to absorb any transitional effects. Kumar stated that this prudent provisioning approach should prevent significant disruptions to profitability.
The bank’s capital position remains robust, with a capital adequacy ratio of 17.91 percent and a common equity Tier-I ratio of 15.61 percent. Although the board has approved plans to raise approximately 7,000 crore rupees in capital, Kumar emphasized that there are no immediate intentions to do so, given the bank’s current capital sufficiency.
In summary, Central Bank of India is focusing on strengthening its financial fundamentals through sustained loan growth and cost management, while cautiously navigating regulatory changes in credit loss provisioning.