Mumbai, Aug. 21: The Central Bank of India made a smart debut on the stock exchanges on a day when the sensex plummeted 438.44 points and investor confidence in bank stocks was low. The public sector bank today opened at a premium of 27.54 per cent to its offer price of Rs 130.10 and thereafter finished in the green.
The Central Bank came out with an initial public offering (IPO) last month. The IPO got subscribed by more than 62 times. The price band for the issue has been fixed at Rs 102 per share.
The share opened at Rs 130.10 on the BSE and hit an intra-day high of 133.25.
The share remained above its issue price throughout the day despite many banking stocks witnessing selling pressure and the BSE Bankex leading the indices list of percentage losers. It closed at Rs 115.40 after touching the day’s low of Rs 114.
The company had offered 8 crore shares, or 19.8 per cent of its post-issue capital, raising Rs 816 crore. The proceeds from the issue will be used for technology upgradation and business development. Post-issue, the bank’s capital adequacy ratio is expected to rise to 11.8 per cent from 10.4 per cent.
The government’s shareholding in the bank will come down to 80.2 per cent from 100 per cent.
The Central Bank is the third largest bank in India in terms of the number of branches.
It has a domestic network of 3,194 branches, comprising 1,341 rural, 759 semi-urban, 575 urban and 519 metropolitan branches spread across 27 states and three Union Territories.
Over the past few years, it has been focussing on three main areas — corporate, retail and agriculture.
The Central Bank is among the few public sector banks that has a relatively high amount of non-performing assets (NPAs). The bank has been concentrating on bringing down the gross NPA to below 2 per cent from 4.81 per cent on March 31, 2007 and net NPA to below 1 per cent.
It has formed seven recovery cells that are focussed on the recovery of NPAs.
It is also utilising the one-time settlement and out-of-court settlement of debts to bring down the NPAs.
For the current year, the bank expects its advances to grow by around 24 per cent and deposits by over 20 per cent.
The non-fee income is also expected to grow by over 5 per cent.