Allahabad Bank Poised for a Great Leap-Forward

Highlights of Performance

• The Business of the Bank crossed Rs.55,000 crores mark and reached to Rs.55330 crores as on 30.9.2004.

• Year-on-Year basis, the Business increased by 33.29% against the growth of 12.34% in the corresponding period last year.

• Total Deposits of the Bank grew by 14.38% during April-Sept.’2004 as against 7.57% during the corresponding period last year. YOY basis, it increased by 31.44%.

• Market Share in aggregate deposits increased to 2.18% as on 17.9.2004 from 1.96% as on 26.3.2004.

• Operating Profit of the Bank marked a growth of 91.83% during the April-Sept’04 over April-Sept.’03.

• Net profit increased by 110.76% during the half-year ended Sept. 2004 over the corresponding period last year.

• Net NPA reduced to 1.64% as on 30.9.2004 from 2.37% as on 31.3.2004 and 5.21% as on 30.9.2003.

• Gross NPA declined to 6.70% as on 30.9.2004 from 8.66% as on 31.3.2004 and 12.03% as on 30.9.2003.

• EPS (annualised) increased to Rs.17.49 from Rs.13.37 during this period.

• Book Value per share improved to Rs.53.50 from Rs.44.76 during this period.

• Return on Assets (ROA) rose to 1.52% during April-Sept.’ 2004 from 1.34% during 2003-04 and 0.95% during April-Sept 2003.

• Cost of Deposits reduced to 5.07% during April-September 2004 from 5.63% during 2003-04.

• Productivity (Business per employee) increased to Rs.2.60 crores during April-September 2004 as against Rs.2.15 crores during 2003-04.

• The share of Agricultural Credit and Priority Sector Credit to Net Bank credit Bank has well exceeded the stipulated norms of 18% and 40% respectively.

• The Bank has introduced new products viz., insurance linked deposits scheme, cross-selling of insurance products for harnessing fee-based income.

• International Debit cum ATM Card has been launched in collaboration with VISA. This will enable the cardholders to withdraw cash at over 8,70,000 VISA ATMs globally.

• The Bank is also offering instant Fund Transfer Facility from 60 branches in 9 centres spread all over the country through its dedicated network through Structured Financial Messaging System (SFMS).

• Entire Investment portfolio has been marked to market. The Bank has also achieved the stipulated target of 5% in Investment Fluctuation Reserve (IFR) well ahead of its scheduled time frame of 31.3.2006.

Profitability

• Operating Profit of the Bank during the first half of the year 2004-05 increased to Rs. 615.13 crores from Rs.320.66 crores during April-Sept. 2003, showing a growth of 91.83%.

• Net Profit of the Bank increased to Rs.303.22 crores during the period under review from Rs.143.88 crores during the corresponding period last year, registering a growth of 110.76%.

Business Growth

• The Bank’s total business registered a growth of 33.29% during October’03 to September’04 as compared to 12.34% during the corresponding period last year. The Business of the Bank has increased to Rs.55,330 crores as at Sept.-end 2004 from Rs.47,865 crores as at March-end 2004. Growth during April-Sept. 2004 was 15.60% as against 6.58% during April-Sept. 2003.

• Deposits grew by 14.38% during half-year ending Sept.’04 as compared to 7.57% in the corresponding period last year. Gross Advances grew by 17.93% against the growth of 4.70% during the half year-ended September 2003.

• Non-Food credit grew by 18.62% during the half-year ended Sept’04 and it grew by 39.13% YOY basis.

• During April-Sept. 2004, aggregate deposits of the Bank increased by Rs.4661 crores or 15.06% as against the growth of Rs.2044 crores or 8.28% in the corresponding period last year. Year-on-Year basis, it improved by 33.24% as compared to 14.35% in the corresponding period last year. The market share of aggregate deposits of the Bank increased to 2.18% as on 17.9.2004 from 1.96% as on 26.3.2004 and 1.89% as on 19.9.2003.

Agriculture Banking

• The Bank has revamped its agricultural credit operations by adopting fresh policy decision and by formulating new product lines, which suits the requirements of farming community.

• Minimum target of lending to agriculture credit i.e. 18% of the Net Bank credit is being achieved since March-end 2004. The Finance Minister has awarded a shield for excellence in farm credit shown by the Bank. As on 30.9.2004, agriculture credit to Net Bank Credit formed 19.63%.

• The Bank has disbursed Rs.1003 crores as agricultural credit during April-September 2004 as against the disbursement of Rs.218.39 crores during April-Sept.’03 and Rs.848 crores during 2003-04. The Bank has achieved a growth of 18.28% upto September-end 2004 as against the annual target of 30%.

• In terms of guidelines of Government of India, the Bank has to bring 100 new farmers per Rural and Semi-urban branches per year, the Bank has already brought 1,00,950 new farmers i.e. an average of 78 farmers per branch, in its fold during the first half of the current financial year.

• The Kisan Credit Card (KCC) base of the Bank increased by 88325 during April-September 2004 as against 39551 cards during April-September 2003. The amount of disbursement was Rs.272 crores during April-Sept’04 as compared to Rs.111.31 crores during April-Sept.’03. The cumulative number of KCC holders as on 30.9.2004 stood at 5,02,813.

• The Kisan Shakti Yojana (KSY), a new comprehensive scheme to meet the farm and non-farm credit has already been highly accepted by the farming community. So far, 15670 farmers have joined this scheme with a financial outlay of Rs.230 crores.

• The Bank is continuing its intensive drive for improvement its agriculture credit operations and saturate the credit need of the farmers of more than 28,000 service area villages.

• The Bank has so far provided credit facilities to 24,410 number of SHGs, of which, 14,460 are formed by the Women Entrepreneurs and disbursed Rs.108.66 crores upto 30.9.2004. The outstanding credit to women beneficiaries stood at Rs.1137.54 crores as on 30.9.2004, formimg 5.92% of the Net Bank Credit as against the target of 5%.

• Economic Clusters have been identified for preparation of area-based projects for promotion of the cash crop, Fruits, Flowers and Medicinal plants.

Retail Banking

During the half-year ended September 2004, disbursement under Retail Lending schemes was more than Rs.675 crores, out of which, Housing Loan was over Rs.340 crores constituting 50.37% of the total disbursement. Outstanding retail portfolio as on 30.9.2004 was more than Rs.3400 crores as compared to Rs.2430 crores as on 30.9.2003. More than 250 specialised delivery channels of the Bank, in the form of Retail Banking Boutiques, continued to drive the retail lending activities.

Fee Based Banking

• Distribution alliances with LICI and UTI mutual funds, which were inked up during the previous quarter, were operationalised during this quarter for selling of life insurance and mutual fund products through Bank’s branches. The Bank has deployed 135 fully trained officers in potential branches across the country for promotion of bancassurance and mutual fund business, after they successfully cleared the regulatory certification process of IRDA and AMFI. So far, more than Rs.10 crores premium income (both life and non-life) has been procured during the period.

• One more Depository Participant (DP) was opened in Mumbai during the quarter taking the number of total DPs to 5.

• The Bank is considering to rejuvenate its well capitalised subsidiary ALBANK Finance Ltd. to push up fee-based income to a level comparable with other bigger banks.

Risk Management

The Bank has set up an integrated Risk Management Systems to identify, measure and mitigate Credit, Market and Operational Risk for its various operations. The Bank has prepared a road map for implementation of new Basel II norms and necessary steps have been initiated to fulfill the requirements under the revised norm.

Human Resource Development

The Bank has formulated a comprehensive policy for upgradation of knowledge and skill of its Officers & Employees with the assistance of NIBM. Specialised training programmes for different contemporary banking services like Risk Management, Treasury Management, Corporate Credit Management etc. have been conducted with internal resources and external institutions viz., NIBM, BTC etc. The Bank recruited officers in different specialised disciplines for induction of young talent in the system and improvement of its competitive edge.

NPA Reduction

• Net NPA ratio declined to 1.65% as at September-end 2004 from 2.37% as at March-end 2004 and 5.21% as at September-end 2003. Gross NPA declined to 6.70% as on 30.9.2004 from 8.66% as on 31.3.2004 and 12.03% as on 30.9.2003.

• Gross NPA amount declined to Rs.1295.34 crores as on 30.9.2004 from Rs.1418.46 crores as on 31.3.2004 and Rs.1698.60 crores as on 30.9.2003. Net NPA amount also declined to Rs.299.79 crores as on 30.9.2004 from Rs.362.83 crores as on 31.3.2004 and Rs.683.41 crores as on 30.9.2003.

• NPA Provision coverage ratio went up to 76.58% as at September-end 2004 from 73.75% as at March-end 2004. The coverage ratio was 59.99% as at September-end 2003.

Branch Network

The Bank has 1934 branches as on 30.9.2004, of which 960 are in Rural, 324 in Semi-Urban, 384 in Urban and 266 in Metropolitan areas. The Bank has also 141 Extension Counters spread all over India.

Technology Network

• The Bank launched International Debit cum ATM card in association with VISA to enable the cardholders to withdraw cash at over 8,70,000 VISA ATMs globally.

• The Bank has its own ATM switch for connectivity of the ATMs to provide on-line Any Time Any Where Banking facility to its valued customers in 32 major cities in our country. The Bank is also offering instant Fund Transfer Facility from 60 branches in 9 centres spread all over the country through its dedicated network through Structured Financial Messaging System (SFMS).

• A process has been initiated for implementation of Centralised Banking Solution (CBS). It will also enable the Bank to meet customer expectations by offering a broad range of value added services through ATMs, mobile, Telephone, Internet, Call centres etc.

• On Line Tax Accounting System (OLTAS) has been implemented in 167 branches.

New Initiative

• The Bank has projected a business growth of 27.4% for the current financial year. Total Business is estimated to exceed Rs.61,000 crores as at March-end 2005.

• The Bank has applied to the Reserve Bank of India for setting up a branch at Hongkong. The Bank is also planning to open a representative office in China.

• The Bank is tying-up with Punjab National Bank for a joint venture for business operation in Kazakasthan.

• For extending knowledge on modern techniques of agriculture, Krishi Prashikshan Kendras (Farmers’ Training Centres) will be opened at the Bank’s selected Lead Districts.

• Rural Kiosks are being set up for delivery of the Banking services at the door- step of the farmers.

• To improve the profitability, the Bank aims to improve quality of assets, reduce the Operating Expenses and also to reduce its Net NPAs to less than 1%