Allahabad Bank continues its surge ahead, Q1 Results June 2007

Highlight of Events

Allahabad Bank, the oldest public sector bank, continues its upward trend in most of the performance parameters as evident from the Q-1 results of the Bank for the fiscal 2007-08. The Bank has already crossed an important milestone of amassing Rs. 1 lac crore business as at March-end, 2007. The trend of growth of business and profitability at the end of June, 2007 quarter is in conformity with the projection made for the quarter of the year 2007-08.

The highlights of the performance for the quarter-ended June 2007 are summarised as under:

• The Business of the Bank has crossed Rs.1,03,000 crore mark as at June-end 2007. The Business of the Bank stood at Rs.1,03,379 crores as on 30.06.2007 as against Rs.82,621 crores corresponding date previous year.

• Year-on-Year basis, the Business increased by 25.13%.(During April-June, 2007 : 1.89%)

• Working Funds crosses Rs.70,000 crore mark to reach Rs.71,484 as on June-end, 2007

• Total Deposit of the Bank went up to Rs.62,819 crores as on 30.6.2007 from Rs.49,773 crores as on 30.6.2006 and Rs.59,544 crores as on 31.3.2007.

• Year-on-Year basis, Total Deposits grew by 26.21% (During April-June, 2007 : 5.50%)

• Market Share in aggregate deposits increased to 2.34% as at June-end 2007 from 2.26% as at June-end 2006.

• Gross Credit was Rs.40,560 crores as on 30.6.2007 as against Rs.32,848 crores as on 30.6.2006 and Rs.41914 crores as on 31.3.2007

• Year-on-Year basis, the Gross Credit increased by 23.48%.

• Market share in advances also increased to 2.16% from 2.13% during this period.

• Gross Credit to Total Deposit ratio was 64.57% as at June-end 2007 as against 66.0% as at June-end, 2006.

• Operating Profit increased from Rs.207.43 crores during April-June'06 to Rs.288.87 crores during April-June'07, registering a growth of 39.26% during the period.

• Net Profit of the Bank was Rs.200.40 crores during April-June'07 as against Rs.128.25 crores in the corresponding period last year registering a growth of 56.26%.

• Gross NPA to Gross Advances further declined to 2.46% as at June-end 2007 from 3.67% as at June-end 2006 and 2.61% as at March-end 2007.

• Net NPA to Net Advances ratio also reduced to 0.76% as at June-end 2007 from 0.81% as at June-end 2006 and 1.07% as at March-end,2007.

• Capital Adequacy Ratio was 12.71% as at June-end 2007 which is above the stipulated norm of 9%, as against 12.24% as on 30.6.2006 and 12.52% as on 31.3.2007.

• Net Interest Margin (NIM) remains steady at 2.97% as on 30.6.2007 compared to position as on 31.3.2007.

• As at June-end 2007, Earning per share (EPS) stood at Rs.17.94 as against Rs.11.48 as on 30.6.2006 and Rs.16.79 as on 31.3.2007. Book Value was Rs.104.23 increased from Rs.84.30 as on 30.6.2007 and Rs.100.22 as on 31.3.2007.

• Return on Assets improved from 0.99% as on 30.6.2006 to Rs.1.18% as on 30.6.2007.

• Business per employee rose from Rs.4.04 crores as on 30.6.2006 to Rs.5.02 crores as on 30.6.2007. As on 31.3.2007, the amount stood at Rs.4.56 crores.

• Business per branch improved from Rs.41.31 crores to Rs.49.06 crores during the period.

Business

• The Bank's total business increased from Rs.1,01,458 crores as on 31.3.2007 to Rs.1,03,379 crores as on 30.6.2007, registering a growth of 1.89% during April-June 2007. On Year-on-Year basis, it grew by 25.12%

• Gross Advances stood at Rs.40,560 as on 30.6.2007 as against Rs.32,848 crores (grew by 23.48%) corresponding date last year.

• Non-Food credit grew by Rs. 7833 crores from Rs. 31,876 crores as on 30.6.2006 to Rs. 39,709 crores as at June-end, 2007.

• The market share of aggregate deposits of the Bank increased to 2.34% as at June-end 2007 from 2.26% as at June-end 2006. The Market share of Credit increased to2.16% from 2.13% during this period.

Quarterly Focus points

• Net Profit for the quarter ended June, 2007 was Rs.200.40 crores as against Rs. 128.25 crores during the first quarter of 2006-07 showing an increase of 56.26%

• Gross Profit of the Bank was Rs.288.87 crores compared to Rs. 207.43 crores during the first quarter of 2006-07 showing an increase of 39.26%

• Non-Fund Non-Interest Income during the first quarter of 2007-08 was Rs. 101.12 crores as against Rs.75.82 crores during the corresponding quarter previous year showing an increase of 33.37%.

• Increase in deposits during the quarter April-June, 2007 was Rs.3,275 crores as against increase in deposit to the tune of Rs.1,273 crores in April-June, 2006.

• Gross NPA declined from 2.61% at March-end, 2007 to 2.46% as on June-end,2007.

• Net NPA declined to 0.76% as on 30.6.2007 from 1.07% as on 31.3.2007.

• EPS increased to Rs.17.94 as on 30.6.2007 from Rs.16.79 as on 31.3.2007. Book Value per share increased from Rs.100.22 as at March-end, 2007 to Rs.104.23 as at 30.6.2007.

Social Banking

• For increasing agricultural and allied credit, the Bank is providing training, credit and facilities of Backward & Forward linkages to farmers /rural entrepreneurs at its own Farmers' & Entrepreneurs' Training Institutes in different names at Rae Bareilly (UP), Hazaribagh (Jharkhand) and Bolpur, Santiniketan(WB). The response from the farmers and small entrepreneurs is encouraging. The institutes have become an efficient tool for capacity building for farmers, entrepreneurs, Self Help Group (SHG) members to take economic activities.

• Priority Sector Credit grew from Rs.12,651 crores as on 30.6.2006 to Rs.16,230 crores as on 30.6.2007 recording a year on year growth of 28.29%

• The outstanding agriculture credit increased from Rs.5975 crore as on June-end 2006 to Rs.7200 crore as on June-end 2007 registering growth of 20.5% on year-on-year basis.

• Credit to SME sector went up to Rs.4301.27 crores as on June-end, 2007 from Rs.3396.60 crores as on corresponding date previous year showing a growth of 26.63% during the period.

• In tune with national objectives, the Bank has put the following areas on special thrust under priority sector for the year 2007-08 - Financial Inclusion, Issuance of General Credit Card, Plantation of Horticulture, Financing SME sector and Rural Godowns etc.

Fee Based Banking

• In order to widen scope of selling of Bancassurance and mutual fund products, the Bank has deployed 130 fully trained officers for exclusively marketing third party products.

• In order to give boost to the NF/NI Income, the Bank has tied up with LICI for selling of life insurance products, National Insurance Co Ltd for non-life insurance products, with ECGC for export insurance products and with 5 mutual fund companies like UTI-MF, Principal Pnb, Kotak MF, Reliance AMC and Franklin Templeton for mutual fund products.

• Bank also offers Depository and Cash Management Services and planned to open 18 Local Cheque Collection hubs under Cash Management Services.

• Bank's income from all these para-banking activities was Rs.2.60 crores during April-June, 2007 quarter.

• Technology Initiatives

• Bank has computerized more than 99% of its branches/extension counters as well as business.

• Bank has started CBS implementation and 24 Branches have been rolled over in CBS platform

• The Bank has connected 208 ATMs with 223 branches on its network. With membership of VISA & National Financial Switch, our card members can now access over 12,500 ATMs at a very nominal cost.

• 117 branches are participating in Real Time Gross Settlement (RTGS) network.

• Bank has live NEFT in 92 branches, ECS facility in 43 centres.

• All Branches dealing in Government Business have been computerized.

Risk Management

The aim and objective of Risk Management Practice is to ensure stability and efficiency in the operation of the Bank. While establishing the Risk Management Practice, the Bank has adopted a comprehensive approach, align with the best practice in the Industry covering Organizational structure, Risk Policies, Risk processes, Risk Mitigation and Risk audit, all in order to identify, manage, monitor and control various categories of risks. The Bank has also adopted an integrated approach at the committee level to put in place a robust Risk Management System.

• The Bank is updating / fine-tuning systems and procedures, technological capabilities, Risk structure etc to meet the requirements of the guidelines. The Bank proposes to migrate to the final guidelines given by the RBI for embracing Basel II norms. The Bank initiated parallel run exercise in line with RBI guidelines. The CRAR as per existing norms (Basel I) stands at 12.52% while under parallel run of Basel II norms, it works out to be 11.65% if we take March, 07 figures.

• Improvement in Risk Management practices has been integrated with the betterment of asset quality through introduction of proper credit management practices.

• Centralised Credit Appraisal Cells have been created at Zonal Offices with proper networking arrangement for better processing of credit proposals and prompt decisions.

• Improved credit monitoring measures have already been put in place for insulating the Bank from future loan losses.

Product Innovation & Market Penetration

• The Bank is launching "Reverse Mortgage Scheme" for Senior Citizens to supplement their existing income for meeting day-to-day expenses against security of property.

• The Bank is also introducing "Doorstep Banking" at select branches to bring banking comfort at the door of the customers.

• A Special Scheme has been launched to provide insurance cover to the loanee student under Bank's Education Loan to cover their loan liability. Maximum amount of Education Loan limit has been raised from Rs.7.5 lacs to Rs.10 lacs for studies within India and Rs.20 lacs for studies abroad.

• The Bank has a plan to go into insurance linked business in a bigger way in near future.

Human Resource Development

• For supporting the future business expansion and also to meet the challenges of competition, the Bank has already initiated a series of steps for development of Human Resources of the Bank.

• The Bank has been continuously exposing its workforce to intensive training programmes in Bank's 5 training colleges and also in reputed Training Institutes in India and abroad.

• The Bank has started the process for recruiting about 400 officers - both in General and Specialized Cadres to strengthen the manpower base to meet the increasing demand of business, branch expansion etc.

• The Bank has developed a team of officers for in-house implementation, testing & development and maintenance of application packages at Bank's Institute for Research and Technology at Panchkula (Haryana), besides conducting training programmes.

Customer Service

The Bank has geared up its entire machinery to bring about qualitative improvement in Customer Service. The Bank in this regard has taken the following steps / measures :

• Bank has taken the membership of Banking Codes & Standards Board of India (BCSBI) adopting a code of commitment for ensuring fair and transparent treatment to individual customers.

• Under this, Bank has adopted compensation policy to customers for any loss suffered due to Bank's omissions and commissions, Grievance Redressal Policy among others.

• Bank's Grievance Redressal structure has been further strengthened for speedy disposal of complaints according to seriousness prioritized by ABC grading.

• Bank has further simplified procedure for settlement of claims in respect of deceased deposit accounts.

• Bank has posted a Quality Assurance Officer in Zonal Offices to assess and improve the standard of customer service.

• Complaint format has been made available in Bank's Website for online submission of complaints, if any.

New Initiatives

• Speedy extension of CBS platform to more branches.

• Introduction of Door Step banking.

• Launching of Reverse Mortgage Loan Scheme.

• Bank is planning to go for opening more foreign branches after opening of branch at Hong Kong

The Bank has already established its strong presence in the Banking Industry and we are sure to consolidate our position in the days to come in keeping with the trust of our shareholders as also of our stakeholders.

Kolkata
14th July 2007.

Press Corner