Central Bank of India rises 10% on RBI insurance approval

Shares of the Central Bank of India increased up to 10.56% on Monday, hitting an intraday high of ₹57.86 per share after the public sector bank announced that the Reserve Bank of India (RBI) had approved its entry into the insurance business. The bank plans to collaborate with Generali Group to establish a joint venture in the insurance sector. 

This move has sparked optimism among investors, encouraging many to invest in stocks as the bank’s prospects look brighter.

Approval for a joint venture with Generali Group

The RBI granted the bank permission to enter the insurance business under a joint venture with Generali Group. The approval was granted through a letter dated 21st November 2024. The Central Bank of India revealed that it would work alongside Generali to operate Future Generali India Insurance Company Ltd (FGIICL) and Future Generali India Life Insurance Company Ltd (FGILICL). The deal is subject to meeting regulatory conditions from the Insurance Regulatory and Development Authority of India (IRDAI).

Earlier in October, the Competition Commission of India (CCI) had approved the bank’s proposal to acquire stakes in FGIICL and FGILICL. FGIICL offers a range of personal and commercial insurance products, while FGILICL provides various insurance plans, including savings, investment, term, health, and retirement plans.

Q2FY25 financial results show strong growth

In its financial results for Q2FY25, the Central Bank of India reported a 50.91% increase in net profit compared to the same period last year, reaching ₹913 crore. This growth was driven by higher NII or net interest income and recoveries from written-off accounts. 

Sequentially, net profit also saw a 3.75% increase from the previous quarter. The bank’s NII rose by 12.62% year-on-year to ₹3,410 crore.

Stock performance and market outlook

The Central Bank of India’s stock has shown impressive growth, with an 11% rise year-to-date and a 27% increase over the past year. In comparison, the BSE Sensex has increased by 11% year-to-date and 21% over the last year. 

The bank’s market capitalisation stands at ₹48,830 crore, with its shares trading at a price-to-earnings ratio of 10.36 times and an earnings per share (EPS) of ₹5.05.

At 11:43 AM, the bank's shares were trading 7.51% higher at ₹56.26 per share, outperforming the Sensex, which was up 1.57% to 80,355.56 points.

Key takeaways

1. Central Bank of India’s shares rose after receiving RBI approval for an insurance joint venture.
2. The bank has acquired stakes in Future Generali India Insurance and Life Insurance.
3. Its net profit for Q2FY25 rose by 50.91% year-on-year, reaching ₹913 crore.
4. The bank’s stock has gained 11% in 2024 and 27% over the last year.
5. Central Bank of India’s market cap stands at ₹48,830 crore.