Allahabad Bank Presents Powerful Performance and Spectacular Results

ANALYSIS OF Q4 RESULTS:

• The net profit for quarter ended March 2008 stood at Rs.169.51 crores against Rs.125.74 Crores in the fourth quarter of 2006-07 showing growth of 34.81%.

• Income from Non Fund/Non Interest Business increased to Rs.142.50 crores during the quarter-ended March 2008 as against Rs.132.56 crores during the corresponding quarter last year showing a growth of 7.50%.

• Operating Profit for the quarter ended March, 2008 was Rs. 369.97 crores as against Rs.323.21 crores during March, 2007 quarter showing a growth of 14.47%.

• Interest income grew by 23.38% during the March, 08 quarter to Rs. 1720.02 crores from Rs.1394.10 crores corresponding quarter last year.

HIGHLIGHTS OF PERFORMANCE

Business of the Bank reached Rs. 1,21,928 Crores as on 31.03.2008 from Rs.1,01,457 crores as on 31.3.2007.

Year-on-Year basis, the Business increased by 20.18%.

Total Working Funds of the Bank crossed Rs.80,000 crore mark and stood at Rs.82,939 crores as on 31.3.2008.

Total Deposits of the Bank increased from Rs.59,544 crores as on 31.3.2007 to Rs.71,616 crores as on 31.3.2008 recording a rise of 20.27% during the period.

Market Share in aggregate deposits and gross advances stood at 2.22% and 2.14% respectively as at March, 2008.

Gross advances increased by Rs.8,398 crores, i.e. by 20.04% over previous year to reach Rs.50,312 crores as on 31.3.2008 from Rs. 41,914 crores last year.

Gross Credit to Total Deposit ratio was 70.25% as at March-end 2008.

Net Profit of the Bank shot up by 29.94% to Rs. 974.74 crores during 2007-08 as against Rs.750.14 crores during 2006-07 against a SOI target of Rs.800.00 crores.

Operating Profit of the Bank went up to Rs.1,479.51 crores during 2007-08 as against Rs.1,099.91 crores during 2006-07 recording an impressive increase of 34.51%.

Gross NPA to gross advances declined to 2.00% as on 31.03.2008 from 2.61% as on 31.3.2007.

Net NPA to net advances reduced further to 0.80% as on 31.03.2008 from 1.07% last year.

Low-Cost Deposits of the Bank increased to Rs.25,809 crores as on 31.3.2008 from Rs.22,611 crores as on 31.3.2007. Share of Low-cost Deposit to Total Deposit was 36.04% as on 31.3.2008.

EPS increased to Rs.21.82 from Rs.16.79 during last year.

Book Value per share improved to Rs. 117.47 from Rs.100.22 during this period.

Cost of Deposits was 6.67% during 2007-08.

Yield on Advances increased to 10.76% during 2007-08 from 9.22% during last year.

Net Interest Margin was 2.78% during 2007-08.

Share of Agricultural Credit to Adjusted Net Bank credit exceeded the stipulated norms of 18% and in Priority Sector crossed stipulated norms of 40%.

Capital Adequacy Ratio (CRAR) this year stood at 12.04% computed as per Basel II prescription of RBI. As per Basel I method of calculation, it is 12.23%

PROFITABILITY SOARS

(Amount in Rs. Crores)

Net Profit of the Bank showed an impressive rise to Rs.974.74 crores during the period under review from Rs.750.14 crores during the corresponding period last year, registering an increase of 29.94% during the period.

Operating Profit of the Bank during 2007-08 went up to Rs.1479.51 crores from Rs.1099.91 crores during 2006-07, showing a handsome rise of 34.51% during the period.

EXPANDING BUSINESS

(Amount in Rs. crores)

The Bank's total business registered a growth of 20.18% during 2007-08 increasing from Rs.1,01,458 crores as at March-end 2007 to Rs.1,21,928 crores as at March-end 2008.

 Deposits grew by 20.27% during 2007-08. Low-cost deposits of the Bank increased by 14.14% during 2007-08.

Gross Advances grew by 20.04% during the period under review.

As on 31.3.2008, aggregate deposits of the Bank increased by Rs.11,891 crores as against the growth of Rs.11,198 crores in the corresponding period last year. The market share of aggregate deposits of the Bank was 2.22% as on 31.3.2008. The Market share of Credit was 2.14% during this period.

SOCIAL BANKING – A NATIONAL COMMITMENT

A multi dimensional strategy was put in place during 2007-08 to augment the credit flow to various sectors/ schemes under priority sector with thrust on agriculture and rural infrastructure. The total PSC of our Bank grew by 13.42% to Rs.18,774 crore as at March-end, 2008 from Rs.16,553 crore as on March-end 2007. The percentage of total Priority Sector Credit of the Bank to Adjusted Net bank credit (ANBC) as per RBI norms, stood at 45.47% against stipulated rate of 40%.

The outstanding agriculture credit increased from Rs.7,692 crore as on March-end 2007 to s.9146 crore as on March-end 2008 registering growth of 18.90% and constituting 20.41% of the adjusted net bank credit against norm of 18%.

Fresh Kisan Credit Cards (KCCs) involving an amount of Rs.783.68 crore were issued to 1,44,601 farmers during the year 2007-08 taking the total card base of the Bank to 7.13 lacs involving Rs.2,763 crores.

Credit to weaker section was 10.79% of ANBC against stipulated norms of 10%.

The Bank has taken various initiatives to augment flow of credit to the Minority Communities finding for them economic solutions. Credit to Minority Communities has increased to Rs.2,822.86 crores as on March, 2008 from Rs.2,136.58 crores as on March, 2007

NON-FUND/NON-INTEREST INCOME

Non-Fund/Non-Interest Income of the Bank increased from Rs.358.97 crores during 2006-07 to Rs.437.97 crores during 2007-08, registering a rise of about 22.01%. The increase is attributable mainly improved customer service and an increased fee based income by putting extra thrust on cross-selling of products.

FEE-BASED BANKING

To improve the fee-based income, the Bank has made tie-up with NICL and LIC to sell their insurance products. For promotion of Mutual Fund products, Bank has multiple tie-up with country's five leading AMCs namely and UTI, Principal-PNB, Kotak Mahindra, Franklin Templeton and Reliance Mutual Funds to sell their mutual fund products through Bank's branches. The Bank has deployed 120 fully trained officers in potential branches across the country for promotion of bancassurance and mutual fund business. Income from TPP business recorded a rise of 24%.

Bank is presently doing the business with varied new CMS products with identified 25 pilot centres. Bank has plan to extend the services to all CBS branches.

During the year Bank opened a Depository Participant in New Delhi. Opening of more DPs is being examined.

NPA REDUCTION

During the year 2007-08, there has been marked decline in NPA of the Bank:

• Gross NPA declined to 2.00% as on 31.3.2008 from 2.61% as on 31.3.2007.
• Net NPA ratio showed a marked decrease from 1.07% as at 31.3.2007 to 0.80% as on 31.3.2008.

BRANCH EXPANSION

The Bank has 2154 branches (excluding 1 Foreign Branch) as on 31.3.2008 (2060 as on 31.3.2007) of which 983 (46%) are in Rural, 405 (19%) in Semi-Urban, 452 (20%) in Urban and 314 (15%) in Metropolitan areas. The Bank has also 87 Extension Counters spread all over India. During the year the Bank has opened 94 branches and upgraded 26 extension counters to full fledged branches. As on 31.3.2008, the Bank had 757 branches in minority dominated districts. The Bank has authorization for opening 116 more branches during the year. The Bank has also applied for authorization of 180 more branches during the current financial year.

RISK MANAGEMENT SYSTEMS

Bank has implemented Basel II norms and the Calculation of Capital Adequacy ratio (CRAR) for the year 2007-08 has been done as per the RBI prescription in this regard.

In line with the RBI direction, the Bank has adopted Standardized Approach methodology for calculation of Risk weight under Credit Risk, Basic Indicator Approach for Operational risk and Standardized Approach-duration based approach for market risk.

In line with the best practice in Industry, the Bank has set up a comprehensive Risk Management Framework to effectively identify, measure and manage risk elements of Credit, Market and Operational Risks in an integrated and comprehensive manner. The Bank has evolved suitable Risk Management architecture comprising a Board Level Risk Management Committee.

Further, towards preparedness for advance approach under Basel II, the Bank is in the implementation process of a technology-based MIS system covering all the branches and offices.

STRATEGIC INITIATIVES DURING THE YEAR

A. Resources Mobilization –

Out of the incremental deposit mobilized during the year, more than 90% is core deposit reducing Bank’s high cost bulk deposit component by about 5%.

Special Thrust made on Current Deposit and Savings Bank Depsosit Mobilization with free Accidental Insurance cover of Rs.1 lakh. CASA Campaigns were launched on a door-to-door basis, road shows etc in phases.

High return Term Deposit Account for Senior Citizens : Always offering competitive interest rates in term deposit with 1% more for senior citizens on depsosit up to one year and 0.50% on deposit over that period.

B. DEPLOYMENT

Lending Schemes for rural India

Bank has identified the thrust areas such as financing of supply chains for Agri-Business development, Plantation & Horticulture, Minor Irrigation development, Post harvest storage infrastructures, lending to SHGs/JLGs through Micro Finance Instituions etc to accelerate credit flow to Priority Sector with special emphasis on Agri sub-section.

Bank is planning to introduce a Debt Swapping Scheme for Farmers/Agriculture labourers to give relief to debt strapped farmers who have borrowed money from informal sources – private money lenders to free them from their clutches and bring them to Instituional Credit fold.

Extending Credit to SME Sector

In line with the directives of the Govt. of India, Bank is extending loan to SME Sector on borrower-friendly terms. Credit to MSME increased by 40.83% to Rs.3,530.25 crore as on March, 2008 from Rs.2506.63 crores as on March, 2007. In this sector, credit growth of 35.10% was achieved during 2007-08 against the stipulated growth of 20%.

Retail Lending

Launched Reverse Mortgage Scheme for Senior Citizens. More thrust to Mortgage Based Loans with a view to rebalance portfolio.

On-line Education loan is now available through 250 institutions, besides regular loan through all branches.

Other initiatives include -Life Insurance cover for all education loans, lowering of interest on all retail loans including Housing and Education Loan.

Total disbursement under Retail Credit during the year was Rs.1,292.69 crores in 46618 accounts. Total outstanding under retail credit was Rs.7,394.25 as on 31.3.2008.

As on 31.3.2008, total outstanding in education loan was Rs. 463.10 crores in 23,440 accounts while the total amount of loan disbursed was Rs.141.55 crores in 7254 accounts.

C CAPACITY BUILDING

Integrated model of training for farmers/rural entrepreneurs

For operationalizing integrated model of providing training, credit and facilities of backward & forward linkage to farmers and rural entrepreneurs, the Bank established another Farmers’ & Entrepreneurs’ Training Institute at Debra (Paschim Medinipur, West Bengal) during the year in addition to those existing at Hazaribagh (Ranchi), Rae Bareilly (UP) and Bolpur (WB). Encouraged by wide response from all sections of beneficiaries, Bank has planned to open more such institutes in future.

C CAPACITY BUILDING (Contd…)

Technological Upgradation

The Bank launched Internet, SMS and e-banking during the year with Hon’ble Union Finance Minister, Shri P. Chidambaram inaugurating the service for the benefit of the customers.

Bank’s Website (www.allahabadbank.in) is now available in Bengali language also besides Hindi and English. Bank has decided to introduce more vernacular versions of its website in near future.

Bank has computerized all its branches and extension counters.

211 ATMs installed with VISA and National Financial Switch (NFS) connectivity with accessibility from more than 18,500 points and 5 lacs POS terminals. Bank has already issued more than 2.95 lakh Photo and Signature VISA International ATM-cum-VISA Cards.

Real Time Gross Settlement (RTGS) live in 165 branches.

Online Tax Accounting System (OLTAS) implemented in all 167 designated branches

Bank is fast progressing with CBS implementation with more than 210 branches rolling out under CBS platform covering about 50% of Bank business.

Electronic Accounting System in Excise & Service Tax (EASIEST) has been rolled out in 183 authorized branches.

Video Conferencing System has been commissioned in 16 selected locations facilitating meetings, group discussions, conducting training programme etc.

Human Capital- HR Initiatives

Bank has been continuously exposing its officers and employees to various need based training programmes in its internal training institutions as well as various external training institutes of repute in India and abroad.

During the financial year, a total of 13383 officers/ employees have been exposed to training, which constitutes more than 60% of the total work force.

To supplement Bank’s efforts for speedy implementation of CBS at its branches, thrust has been given for imparting training on CBS-End Users Programme to all its workforce in collaboration with TCS, the system integrator.

As a new initiative, the Bank has been conducting a focused programme on managerial effectiveness including Basel II awareness for executives in Scale IV grade.

Corporate Communications:

Bank’s visibility has increased manifold and its products have made distinctive presence in the market. With continuous efforts for better communication with the support from the Press, Bank has created a favourable environment in which mutual understanding and relationship amongst various stakeholders have strengthened.

Bank’s House Magazine ‘Triveni Dhara’ was awarded the Second best magazine prize by Reserve Bank of India among all nationalized banks.

Bank secured Second Position in linguistic Region ‘A’ under Reserve Bank Rajbhasha Shield Competition. Bank’s Behala Region bagged first prize in the same field among nationalized banks of eastern region.

LOOKING AHEAD –FUTURE INITIATIVES

Fully equipped to face the emerging challenges before us:

Automation : Bank has made strategic plan for extensive mechanization of operations by the year 2008-09. One of the major steps envisaged is Centralized Banking Solutions (CBS) in 900 Branches by March, 2009.

Human Resources restructuring : Competency Based Training (CBT) will be implemented for creating an ideal environment for learning, relearning on an on-going basis. The Bank has taken initiative to rationalise its Retail Banking Boutiques to make these units more effective and buisness oriented.

Other future Initiatives

Introducing Centralized Loan Processing services in select cities like, Ahmedabad, Mumbai, Kolkata, Lucknow etc.

More aggressive marketing of cross selling of insurance and mutual fund products with more emphasis on income generation.

Bank has decided to establish Business Development Cells (BDCs) initially at 6 centres for providing thrust to various marketing activities with focus on retail business.

To streamline the process of speedy sanction, innovative Retail Credit Malls are being opened in four Metro cities i.e. Kolkata, Chennai, Mumbai & New Delhi and in two State capitals - Lucknow (UP) and Bhopal (MP).

SUBSIDIARY

ALLBank Finance Ltd

AllBank Finance Ltd, a wholly owned subsidiary of the Bank, have been registered with the SEBI as a Category-I merchant bankers and underwriters. The company earned a profit (PAT) of Rs.3.95 crores for the year 2007-08 as against Rs.2.89 crores during the last year.

The subsidiary offers a host of emerging opportunities which are as under:

• IPO Management
• Advisory Services
• Wealth Management and portfolio Advisory
• Underwriting
• Mutual Fund Distribution

Kolkata
3^rd May 2008.

Press Corner