CENTRALBK Q2 FY27 Earnings Call: Net Profit Jumps 21% YoY, Guides Credit Cost Up To 0.75%

CENTRALBK held its Q2 FY27 earnings call on October 17, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Profit Growth, Mixed Delivery vs Guidance

• Net profit of Rs.1,469 Cr (+21% YoY) — operating profit of Rs.2,268 Cr (+27% YoY) and NII of Rs.4,146 Cr (+26.3% YoY) in Q2 FY 2026-2027.
• Total business grew 20.5% YoY to Rs.8,89,541 Cr — exceeding management's FY 2026-2027 guidance of 14-15%; global advances grew 29.8% YoY vs guidance of 14-16%.
• NIM at 3.01% — in line with guidance of >3%, though NIM contracted 5 bps QoQ in Q2 FY 2026-2027.
• Cost-to-income missed FY 2026-2027 guidance — actual 58.95% vs guidance of <56%; CASA ratio of 44.65% also missed the 48%±1% guidance, with management citing FNRB mobilization as a factor for the CASA miss.
• Business per employee improved to Rs.25.26 Cr — up from Rs.21.48 Cr in Q2 FY 2025-2026.
• Analyst Siddharth Rajpurohit (Systematix Institutional Equities) characterized the quarter as a strong result; the first Q&A question from Ashok Ajmera (Agcon Global) was inaudible with no response provided.

Clean Book, Buffer-Building Drives Provision Uptick

• Gross NPA at 2.39% (guidance: <2.50%) — Net NPA at 0.31%, improved 17 bps YoY; Provision Coverage Ratio at 97.16% and slippage ratio at 0.24% (guidance: <0.25%) in Q2 FY 2026-2027.
• Credit cost of 0.53% in Q2 FY 2026-2027 — management guided credit cost to remain up to 0.75% for FY 2026-2027 and <0.75% for FY 2027-2028.
• Standard asset provisions rose to Rs.399 Cr — from ~Rs.30-37 Cr in Q2 FY 2025-2026; management attributed higher provisions to a resilient buffer-building approach.
• Slippage ratio trend declining — 1.47% in FY 2024-2025, 1.16% in FY 2025-2026, 0.24% in Q2 FY 2026-2027; gross slippages dropped significantly, attributed by management to proactive steps by the CRMB vertical and technology integration.
• Provision reversal on SR investments — occurred in Q2 FY 2026-2027 after a part payment from Jay Prakash Power reduced the outstanding.
• Management withheld guidance on potential El Niño/drought impact on rural collections, noting no stress signals observed in Q2 FY 2026-2027.

ECL Readiness and a Deep Written-Off Pool

• ECL provisioning requirement of Rs.5,000-5,500 Cr — scheduled for implementation from 1 April 2027 (FY 2027-2028); management guided it will not be a challenge, with Rs.1,525 Cr already provided for Stage 1 & 2 and Stage 3 100% provided as of Q2 FY 2026-2027.
• Decision pending on ECL absorption path — whether to take a one-time hit or stagger the impact per regulator options; no timeline given for the decision.
• Recovery from written-off book of Rs.485 Cr in Q2 FY 2026-2027 — management guided FY 2026-2027 recovery at Rs.2,500+ Cr (vs Rs.2,000-2,700 Cr in FY 2025-2026), with a remaining pool of Rs.31,301 Cr.
• ~Rs.700 Cr expected from the aviation account — via SARFAESI auction in Q2/Q3 FY 2026-2027; a new electronic OTS (EOTS) scheme announced for small accounts.
• SARFAESI auction properties in H1 FY 2026-2027 matched the full-year FY 2025-2026 total of 485 — indicating an accelerated resolution pace.

RAM Focus, Corporate Surge, and Gold Loan Expansion

• RAM portfolio grew 21.1% YoY to Rs.2,54,273 Cr — Retail up 24.49%, Agriculture ~20%, MSME ~17%; RAM-to-corporate ratio of 68:32 aligned with the 65:35±5% guidance, with 65% of branches in rural/semi-urban areas.
• Corporate book grew 42% YoY to Rs.1,18,666 Cr — from Rs.83,000 Cr in Q2 FY 2025-2026, now 32% of the total book; pipeline of ~Rs.24,000 Cr (Rs.7,000 Cr undisbursed, Rs.5,000 Cr under process, Rs.11,000 Cr under consideration) focused on roads, infrastructure, and data centers.
• Management targeting 115 dedicated gold loan branches in Q3 FY 2026-2027 and FY 2027-2028 — alongside tie-ups with 26 states under NRLM for SHG lending as key growth engines.
• Gold loan book of Rs.41,000 Cr at an average yield of 8.5% — management flagged expansion in Chennai and Hyderabad zones as a lever to improve overall yield in FY 2027-2028.
• Gift City branch (opened June 2026) contributed Rs.8,093 Cr to overseas advances — the bank raised US$926.74 million in FCNRB deposits across 731 accounts and provided US$794.60 million in overseas loans against these deposits in Q2 FY 2026-2027.
• ECLGS 5.0 sanctions of ~Rs.4,000 Cr for MSME — with only Rs.50-60 Cr remaining to be disbursed as of Q2 FY 2026-2027.

Yield Compression Offset by Deposit Cost Discipline

• Yield on advances at 7.87% for FY 2026-2027 — management acknowledged it is comparatively lower, attributing this to >61% of the loan book being linked to the external benchmark (repo rate) and the impact of a 125 bps reduction in the lending rate.
• Cost of deposits at 4.60% — enabling NIM above 3% and ROA above 1% despite yield compression; management expects margins to improve from Q3 FY 2026-2027 as repo rates rise.
• Treasury yield of 7.99% in Q2 FY 2026-2027 — AFS income of Rs.1,023 Cr (vs Rs.843 Cr in Q1 FY 2026-2027); treasury team earned Rs.56 Cr via IPO sales; management cited a challenging outlook due to global rate scenarios (US rates at 5.35%+).
• Management guided that a rising interest rate scenario in FY 2027-2028 would benefit the bank's yield on advances — with 68% of the advances book in the retail segment and 61% externally benchmarked.
• Average LCR at 156% — as of Q2 FY 2026-2027.

H2 Efficiency Push, ROA Ambition, Digital Catch-Up

• Management guided interventions in people, process, and technology will sustain Q2 FY 2026-2027 performance levels through Q3 and Q4 FY 2026-2027 — with efficiency numbers expected to see significant improvement in H2 FY 2026-2027.
• ROA guided to remain >1% — management is endeavoring to maintain ROA >1% in FY28 and FY29, but cautioned that rapidly changing conditions make a firm long-term commitment imprudent.
• Digital gap acknowledged vs peers — management committed to improvement; a new NBET department has been formed and 45 digital journeys launched, with significant improvement in the digital interface guided for Q3 FY 2026-2027.
• 300 marketing officers deployed and wealth management initiated — a credit card franchisee is planned by Q1 FY 2027-2028, and cash management services are being launched.
• CASA grew 9.23% YoY to Rs.2,26,774 Cr — savings deposits up 9.32%; 2,658 of 4,622 branches maintain CASA >50%, though the overall CASA ratio of 44.65% remains below the FY 2026-2027 guidance of 48%±1%.