Management Outlook for the Banking Sector:

Allahabad Bank’s outlook for the banking sector in India is extremely positive. Among the many factors contributing to this would be:

• Resource will possibly prove to be a constraint, as deposit mobilisation may not keep pace with credit growth.

• Credit growth to continue in Corporate, Infrastructure and retail sectors and as interest rates on loans start moving up Net interest margins are expected to improve.

• There may be more focused rural banking in coming years as Government policies encourage and also guide banks to that path.

• Very low penetration of financial products (like mutual funds, insurance, etc.) as of now will present banks with a good opportunity for increasing fee-based income, through distribution of third-party products.

• International banking operations of Indian banks will go up more and more, with increased globalisation.

Management Outlook for Allahabad Bank:

Allahabad Bank is ideally poised today to leverage the upturn in the Indian economy and reap benefits from the same. Various enabling factors include:

• With a pan India presence and concentration of network in the Gangetic plane in particular, there are greater opportunities for garnering low cost deposit.

• As the share of low cost CASA deposit goes up and the yield on advances improves with thrust on high yielding retail and SME loans the Net Interest Margin is expected to look up.

• In the rising interest rate scenario thrust on Corporate, Infrastructure and on Retail sectors with diversified product range is expected to add to the profitability of the bank.

• A major boost in business will come through cross-selling of the Bank’s products. Focus on fee-based income through distribution of third-party products, foreign exchange transactions, derivative products, etc. will yield rich dividends.

• International banking operations will go up as the Bank is on the verge of opening branch/representative offices in Hongkong and China respectively.

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Subject to clauses given in Safe Harbour