ALLAHABAD BANK'S BUSINESS CROSSED Rs.50,000 crores as on 30.6.2004

PERFORMANCE HIGHLIGHTS

• The Business of the Bank increased to Rs.51675 crores as on 30.6.2004 from Rs.47865 crores as on 31.3.2004, a growth of Rs.3810 crores (7.96%) during April-June 2004 as compared to the growth of Rs.437 crores (1.12%) in the corresponding period last year.

• Year-on-Year basis, the Business increased by Rs.12288 crores or 31.20% as against the growth of Rs.5049 crores or 14.70% in the corresponding period last year.

• Deposits of the Bank grew by 9.31% during April-June 2004 as against 0.99% during the corresponding period last year. YOY basis, it increased by 33.81%.

• Market Share in aggregate deposits increased to 2.12% as on 25.6.2004.

• Operating Profit of the Bank marked growth of 66.41% during the April-June'04 over April-June'03.

• Net profit increased by 102.52% during the quarter ended June 2004 over the corresponding quarter last year.

• Net NPA reduced to 1.69% as on 30.6.2004 from 2.37% as on 31.3.2004 and 6.31% as on 30.6.2003.

• Gross NPA declined to 8.03% as on 30.6.2004 from 8.66% as on 31.3.2004 and 13.39% as on 30.6.2003.

• EPS (annualised) increased to Rs.15.88 from Rs.13.37 during this period.

• Book Value per share improves to Rs.48.73 from Rs.44.76 during this period.

• Return on Assets (ROA) rose to 1.45% during April-June 2004 from 1.34% during 2003-04 and 0.95% during April-June 2003.

• Cost of Deposits reduced to 5.20% during April-June 2004 from 5.63% during 2003-04.

• Spread (Interest Earned minus Interest Expended) increased to Rs.288.25 crores during April-June 2004 from Rs.246.13 crores in the corresponding period last year.

OPERATING RESULTS

PROFITABILITY

• Operating Profit of the Bank during the first quarter of the year 2004-05 increased to Rs.318.39 crores from Rs.191.33 crores during April-June 2003, showing a growth of 66.41%.

• Net Profit of the Bank increased to Rs.137.65 crores during the period under review from Rs.67.97 crores during the corresponding period last year, registering a growth of 102.52%.

BUSINESS GROWTH

• The Business of the Bank increased to Rs.51,675 crores as at June-end 2004 from Rs.47,865 crores as at March-end 2004. Growth during April-June 2004 was 7.96% as against 1.12% during April-June 2003. YOY basis, it grew by 31.20%.

• Deposits grew by 33.81% during July'03 to June'04 as compared to 12.21% in the corresponding period last year. Gross Advances grew by 26.28% and 19.70% during this period respectively.

• Non-Food credit grew by 4.66% during the quarter ended June'04 and it grew by 30.13% YOY basis.

• During April-June 2004, aggregate deposits of the Bank grew by Rs.3078 crores or 9.94% as against the growth of Rs.189 crores or 0.77% in the corresponding period last year. Year-on-Year basis, it grew by 36.82% as compared to 13.90% in the corresponding period last year. The market share of aggregate deposits of our Bank increased to 2.12% as on 25.6.2004 from 1.96% as on 26.3.2004 and 1.83% as on 27.6.2003.

SOCIAL BANKING

• The Bank is continuing compliance to the requirement of social banking commitment as prescribed by the Reserve Bank of India. As at June-end 2004, the Priority Sector Credit and Agriculture Credit of the Bank formed 45.10% and 18.31% of Net Bank Credit respectively as against the norm of 40% and 18%.

• In terms of the Budget announcement by the Hon'ble Finance Minister, the Bank has initiated necessary steps to revamp its agricultural credit portfolios and has disbursed Rs.413 crores as agriculture credit during April-June'04 as compared to the disbursement of Rs.85 crores during April-June'03.

• To improve awareness of the Bank's staff as well as the villagers in our service areas, special promotional programmes have been held at various centres of our lead districts and other important centres.

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

• The Bank has issued 23,242 fresh Kisan Credit Cards (KCC) during April-June 2004 amounting Rs. 74 crores as against 5885 during April-June 2003. The cumulative number of KCC as on 30.6.2004 stood at 4,37,730.

• The Bank is pioneer in launching an innovative scheme named Kisan Shakti Yojana (KSY) on its 140th birthday to meet the investment and consumption credit requirement of the farmers along with production credit through a hassle free credit delivery mechanism termed as Kisan Credit -cum- Kisan Shakti Card and is receiving good response from the farmers. During the first quarter of the current financial year, loans aggregating Rs.91 crores have been allowed to 5700 farmers under the above scheme.

• The Bank has so far provided credit facilities to 22,300 number of SHGs, of which, 12,500 are formed by the Women Entrepreneurs and disbursed Rs.35.20 crores upto 30.6.2004. Incidentally, the Bank has also satisfied the norm of extending 5% of its Net Bank Credit to the Women beneficiaries.

RETAIL BANKING

• The disbursement under retail lending during the quarter was Rs.352.03 crore as against Rs.345.42 crores during the corresponding period last year. The Bank has put more thrust on increasing asset-based retail lending during current financial year. Housing loan disbursement during the quarter was more than 33%. The outstanding loan amount under retail lending schemes was Rs.3283 crore as on 30.6.2004 as compared to Rs.2096 crores as on 30.6.2003.

• The Bank's Retail Banking Boutiques continued to spearhead the retail lending activities of the Bank. The Bank has planed to open 100 new Retail Banking Boutiques at potential centres during the current financial year.

FEE BASED BANKING

• In order to improve fee based income, the Bank has been eyeing on various alternative routes like bancassurance and mutual fund business.

• During the quarter, the Bank has signed a Memorandum of Understanding with UTI Mutual Fund for distribution of mutual fund products through the Bank's branches under Corporate Agency arrangements.

• A similar tie-up has also been entered into with the Life Insurance Corporation of India (LICI) for marketing of life insurance products.

• During the quarter, the Bank has put 135 dedicated Officers through the regulatory training & tests on bancassurance and mutual fund business. These Officers have already taken their guard in 135 identified potential branches all over the country to exclusively take forward the bancassurance and mutual fund business.

• The Bank already has a Corporate Agency tie-up with National Insurance Co. Ltd. (NICL) for distribution of general (non-life) insurance products and with Export Credit Corp. Ltd. (ECGC) for distribution of the product.

NPA MANAGEMENT

• Net NPA ratio declined to 1.69% as at June-end 2003 from 2.37% as at March-end 2004 and 6.31% as at June-end 2003. Gross NPA declined to 8.03% as on 30.6.2004 from 8.66% as on 31.3.2004 and 13.39% as on 30.6.2003.

• Gross NPA amount declined to Rs.1386.95 crores as on 30.6.2004 from Rs.1418.46 crores as on 31.3.2004 and Rs.1830.32 crores as on 30.6.2003. Net NPA amount also declined to Rs.273.53 crores as on 30.6.2004 from Rs.362.83 crores as on 31.3.2004 and Rs.798.70 crores as on 30.6.2003.

• Provision coverage ratio went up to 79.61% as at June-end 2004 from 73.75% as at March-end 2004. The coverage ratio was 55.65% as at June -end 2003.

RISK MANAGEMENT

• The Bank has set up an integrated Risk Management Systems to identify, measure and mitigate Credit, Market and Operation Risk dealt during various operations. The technology based Risk Management Systems has been made operational with the installation of Wide Area NetWork (WAN) and accessible by the branches and offices.

HUMAN RESOURCE MANAGEMENT

• 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. has been conducted with internal resources and external institutions viz., NIBM, BTC etc. The Bank has also recruited officers in different specialised disciplines for induction of young talent in the system and improvement of its competitive edge.

BRANCH NETWORK

• The Bank has 1932 branches as on 30.6.2004, of which 960 are in Rural, 323 in Semi-Urban, 383 in Urban and 266 in Metropolitan areas. The Bank has also 141 Extension Counters spread all over India.

TECHNOLOGY NETWORK

• The Bank has put in place a comprehensive technology plan. As at June-end 2004, the Bank has computerized 919 branches and 136 extension counters. These computerised branches covered 78.27% of the Business as on 30.6.2004.

• A process has been initiated for putting in place Centralised Banking Solution (CBS).

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

• The Real Time Gross Settlement System (RTGS) has been made operational at Mumbai.

LOOKING FORWARD

• 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.

• Approval of the Board has been obtained for opening a branch at Hongkong. Necessary formalities are being completed for obtaining approval from appropriate authorites.

• The Bank has made suitable plan to achieve agricultural credit target in terms of the announcement of the Union Finance Minister.

• 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%.

• The Bank has also set up 85 ATMs across the country. ATM Switch has been installed at Mumbai and integration work is under progress, for on-line ATM facilities with VISA International Debit Card.