India Ratings has affirmed Central Bank of India’s (CBOI) long-term issuer rating and its Basel III Tier-II bonds at ‘IND AA’/Stable. The rating affirmation reflects CBOI’s improved capital position, strengthened operating buffers, and continued asset quality improvements. CBOI’s strong CASA franchise and adequate headroom for credit growth also support the rating. The rating incorporates the expectation of continued support from the Government of India.
Rating Affirmation Rationale
The affirmation of Central Bank of India’s (CBOI) ratings is driven by several key factors:
- Improved capital position
- Enhanced operating buffers
- Continuous improvement in asset quality
- Strong CASA franchise
Key Rating Drivers
Strengths:
- Capital Buffers: Strengthened capital buffers and improved internal accruals have enhanced CBOI’s financial stability.
- Liability Franchise: Improved liability franchise indicates a strong deposit base.
- Asset Quality: Improving asset quality, with declining credit costs and manageable Special Mention Accounts.
Weaknesses:
- Improved earnings being offset by net interest margin (NIM) compression, suggesting that the sustainability of ROA remains key.
Financial Highlights
- Common Equity Tier-1 Ratio (1HFY26): 14.98% (FY25: 14.73%; FY24: 12.46%)
- Capital Adequacy Ratio (1HFY26): 17.34% (FY25: 17.02%; FY24: 15.08%)
- Gross Non-Performing Assets (GNPA) Ratio (1HFY26): Declined to 3.01% (FY25: 3.18%; FY24: 4.50%)
- Net Non-Performing Assets (NNPA) levels: at 0.48%
- CASA Deposit Ratio (2QFY26): 46.8%
- Liquidity Coverage Ratio: 241.9% as of September 30, 2025
Rating Sensitivities
Positive Triggers:
- Substantial growth in the franchise delivering consistent market share gains.
- Further improvement in profitability while maintaining capital buffers at materially higher levels than regulatory requirements.
Negative Triggers:
- Any change in the Government of India’s majority ownership or a change in Ind-Ra’s opinion regarding the Government’s timely support.
- Sustained deterioration in operating performance and continuing pressure on asset quality.
Instrument Details
- Long-Term Issuer Rating: IND AA/Stable
- Basel III Tier-II Bonds: IND AA/Stable
Additional Information
The ratings were solicited by the issuer, and India Ratings has been compensated for providing the ratings. ESG factors were found to have a minimal impact on the credit ratings.
Source: BSE