State-run Central Bank of India has posted a decline in net profit for the fiscal quarter ended March 31, 2008 of 14.7 percent, at Rs.127.20 crore ($31.8 million) as against Rs.149.13 crore ($37.28 million) in the corresponding quarter a year earlier.
The bank's net interest income, the difference between what it paid for funds and what it earned from lending, fell 25.22 percent to Rs.538.28 crore ($134.57 million) in the fourth quarter, from Rs.719.84 crore ($179.96 million) for the corresponding period, a year earlier.
According to bank chairperson and managing director H.A. Daruwalla, the decline was due to higher interest payout on deposits, which were used to meet the unexpected growth in advances.
High cost deposits of about Rs.9,900 crore matured in this quarter. Also, the advances unexpectedly grew from Rs 5,600 crore in December to Rs.15,000 crore in Q4. We were compelled to raise high cost deposits to avoid an asset liability mismatch, she said.
However, the average yield on advances has gone up to 10.47 percent during the quarter, against the year's average of 9.75 percent, she added.
The bank's deposit base for the fiscal year ended March 31, 2008, was Rs.1,10,000 crore ($27.5 billion) as against around Rs.97,000 crore ($24.25 billion) for the 9 months ended December 31, 2007.
The bank's Board of Directors has recommended a 20 percent dividend for 2007-08, same as what was announced for 2006-07.
($1 million = Rs.4 crore)