Allahabad Bank reaches new height of performance

HIGHLIGHTS OF PERFORMANCE:

• The Business of the Bank has reached Rs.78,561 crores as on 31.03.2006 from Rs.62,914 crores as on 31.3.2005.
    
• Year-on-Year basis, the Business increased by 24.87%.
    
• Total Working Funds of the Bank crossed Rs.55,000 crore mark and stood at Rs.55,291 crores as on 31.3.2006.
    
• Total Deposits of the Bank increased from Rs.40,762 crores as on 31.3.2005 to Rs.48,500 crores as on 31.3.2006 recording a rise of 19% during the period, which is above Industry growth of 16.9%.
    
• Market Share in aggregate deposits increased to 2.29% as on March-end 2006 from 2.25% as on March-end 2005.
    
• Market share in advances also increased to 2.02% from 1.92% during this period.
       
• Gross advances increased by Rs.7909 crores, i.e. by 35.7% over previous year to reach Rs.30,061 crores as on 31.3.2006 from Rs.22,152 crores last year. The growth, once again, is above Industry growth of 29.9%.
        
• Gross Credit to Total Deposit ratio increased to 62.0% as on March-end 2006 from 54.3% as on March-end 2005.
     
• Net Profit of the Bank increased from Rs.541.80 crores during 2004-05 to Rs.706.13 crores during 2005-06 showing a significant growth of 30.33% as against the growth of 16.92% in the corresponding period last year.
        
• Operating Profit of the Bank rose from Rs.933.79 crores for 2004-05 to Rs.1024.15 crores during the year registering a growth of 9.68%.
      
• Gross NPA to gross advances declined to 3.94% as on 31.03.2006 from 5.80% as on 31.3.2005.
    
• Net NPA to net advances reduced to 0.84% as on 31.03.2006 from 1.28% as on 31.3.2005.
    
• Slippage Ratio also declined to 1.62% as on 31.3.2006 from 2.35% previous year
    
• Low-Cost Deposits of the Bank increased to Rs.19,049 crores from Rs.15,771 crores during this period registering a growth of 20.78% during 2005-06 as against 19.58% during 2004-05. In Current Deposits, the growth was 23.71% as against 15.89% last year. Share of Low-cost Deposit to Total Deposit increased from 38.69% last year to 39.28% as on 31.3.2006.
    
• EPS (annualised) increased to Rs.16.06 (with diluted capital) from Rs.15.63 during last year.
    
• Book Value per share improved to Rs.81.45 from Rs.67.14 during this period.
    
• Cost of Deposits reduced to 4.97% during 2005-06 from 5.00% during 2004-05.
    
• Productivity (Business per employee) increased to Rs.3.62 crores during 2005-06 as against Rs.2.82 crores during 2004-05.
    
• 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.
    
• Capital Adequacy Ratio (CRAR) rose to 13.37% as on 31.3.2006 from 12.53% as on 31.3.2005
    
• Provision coverage ratio stood at 77.16% during the period.
    
• Net Interest Margin was 3.17% during 2005-06.

ANALYSIS OF Q4 RESULTS:

• The net profit for quarter ended March 31, 2006 stood at Rs.150.50 crores against Rs.79.33 crores in the fourth quarter of 2004-05, registering a growth of 89.78%.
        
• Income from Non Fund/Non Interest Business increased by Rs.89.62 crores during the quarter-ended 31.03.2006 as against the growth of Rs.68.72 crores during the corresponding previous period.
        
• The Bank could achieve higher profitability even after lower profit from Sale of Investment.
     
• Ratio of Other Operating Expenses to Total Expenses has come down from 15.59% during Q4 of 2004-05 to 14.05% during Q4 of 2005-06.
    
• The Bank could reduce its Net NPA Ratio substantially to 0.84% as on 31.03.2006 against ratio of 1.28% as on 31.03.2005.
         

• Current Deposits grew by Rs.511 crores during the quarter under review as against the growth of Rs.462 crores in the corresponding quarter last year.

PROFITABILITY ON SUSTAINED GROWTH PATH:

• Net Profit of the Bank increased to Rs.706.13 crores during the period under review from Rs.541.80 crores during the corresponding period last year, registering a growth of 30.33%.
    
• Operating Profit of the Bank during 2005-06 increased to Rs.1024.15 crores from Rs.933.79 crores during 2004-05, showing a growth of 9.68%. Operating Profit excluding Trading Profit registered a growth of 50.97% during the period under review.
    
• Higher profit is attributable to better asset management, reduction in cost of fund, judicious expenditure control and higher NFNI income.

EXPANDING BUSINESS GROWTH:

• The Bank's total business registered a growth of 24.87% during 2005-06 as against 31.44% during 2004-05. The Business of the Bank has increased to Rs.78561 crores as on March-end 2005 from Rs.62914 crores as on March-end 2005.
     
• Deposits grew by 18.98% during 2005-06 as compared to 29.50% in the corresponding period last year. Lower growth of deposits during 2005-06 was mainly due to decline of high cost term deposits. The low-cost deposits of the Bank increased by 20.78% during 2005-06 as against 19.58% during 2004-05.
   
• Gross Advances grew by 35.70% against the growth of 35.17% during the period under review.
    
• Non-Food credit grew by 36.40% (Rs.7724 crores) during 2005-06 as compared to 36.29% (Rs.5650 crores) during 2004-05.
    
• As on 31.3.2006, aggregate deposits of the Bank increased by Rs.7706 crores or 19.22% as against the growth of Rs.9132 crores or 29.50% in the corresponding period last year. The market share of aggregate deposits of the Bank increased to 2.29% as on 31.3.2006 from 2.25% as on 26.3.2005. The Market share of Credit increased to 2.02% from 1.92% during this period.

SOCIAL BANKING - A NATIONAL COMMITMENT:

• A multi pronged strategy was put in place during 2005-06 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 25.19% to Rs.12,453 crores as on March-end, 2006 from Rs.9947 crore as on March-end 2005. The percentage of total Priority Sector Credit of the Bank to net bank credit stood at 41.38% as against norm of 40%.
    
• The outstanding agriculture credit increased from Rs.4146 crores as on March-end 2005 to Rs.5726 crores as on March-end 2006 registering growth of 38.11% and constituting 19.03% of the net bank credit. Against the target of Rs.2634 crores, fresh disbursement of agriculture credit fixed by the Government of India/ RBI for the year 2005-06, our achievement was Rs.2847 crores.
       
• Fresh Kisan Credit Cards (KCCs) involving an amount of Rs.755.99 crores were issued to 176183 farmers during the year 2005-06 taking the total card base of the Bank to 763923 involving Rs.2510.34 crores. The credit to SSI and other priority sectors also increased by 19.64% and 21.86% to Rs.1838 crores and Rs.4888 crores, respectively during 2005-06.
     
• The Bank has revamped its agricultural credit operations by adopting fresh policy decisions and by formulating new product lines, which suit the requirements of farming community.
      

FEE-BASED BANKING:

• To improve the fee-based income, the Bank has made tie-up with NIC and LIC to sell their insurance products and UTI and Principal-PNB mutual funds to sell their mutual fund products through Bank's branches. The Bank has deployed 131 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. During the year, income from cross selling of insurance and mutual fund products including Depository and Cash Management Services increased two times over last year's income to Rs.18.22 crores.

NPA REDUCTION:

During the year 2005-06, there has been marked decline in NPA of the Bank both in absolute and percentage terms

• Gross NPA declined to 3.94% as on 31.3.2006 from 5.80% as on 31.3.2005 and in absolute terms Gross NPA amount declined to Rs.1184 crores from Rs.1284 crores during the period.
    
• Net NPA ratio declined to 0.84% as on March-end 2006 from 1.28% as on March-end 2005 and in absolute terms Net NPA amount also declined to Rs.246.09 crores from Rs.270.70 crores during the period.
       
• Slippage ratio declined to 1.62% as on 31.3.2006 from 2.35% previous year.
      
• NPA Provision coverage ratio was 77.16 % as on March-end 2006.
     
• More than 1,00,000 accounts below Rs.25000/- were settled in special recovery drive taken during the year and a sum of Rs.65 crores were recovered.

      BRANCH EXPANSION:

• The Bank has 1999 branches as on 31.3.2006 (1951 as on 31.3.2005) of which 964 are in Rural, 350 in Semi-Urban, 407 in Urban and 278 in Metropolitan areas. The Bank has also 149 Extension Counters spread all over India.

 GEOGRAPHICAL DISTRIBUTION OF BUSINESS:

Figures in Italic are percentage share to Total

Risk Management Systems:

• The Bank, in its preparedness to embrace Basel II guidelines, has put in place a comprehensive Risk Management Systems in line with the best practice in industry covering areas like organizational structure, risk policies, risk processes, risk mitigation and risk audit with a view to identify, manage, monitor and control various categories of risks. The Bank has also adopted an integrated approach at committee level to put in place a robust Risk Management system in the Bank.
               
• The Bank has developed Risk Assessment Module (RAM) in consultation with CRISIL for rating the corporate borrowers. The Bank has also introduced an exclusive rating module for rating SSI and SME sectors. The Bank has drawn a road map for timely compliance of requirement under Basel II norms.

EVENTS HIGHLIGHTS

STRATEGIC INITIATIVES DURING THE YEAR:

A.   Resources Mobilization - Basketful of benefits to customers

• Twelve Hour Banking Services (8 AM to 8 PM) introduced in 33 selected branches. More branches going to offer extended hour banking.
       
• In line with RBI Policy Statement, No-frill SB Account opens new vista in banking offering scope for SB A/c with initial deposit of Rs.5/-
        
• Special Thrust on Current Deposit Mobilization Introducing CURRENT PLUS deposit scheme offering customers benefit of Fixed Deposit in Current Account - added to this, the Current Deposit has add-on facilities like free remittance, free ATM Card, free Cheque Book and waivement of locker rent. Besides, the Bank has also introduced Premium Current A/c with multi facilities.
        
• Special type SB Accounts Introducing special types of SB Deposit Account Mahila Sanchay for ladies (with Re.1/-), Premium SB, Vikash SB A/c for Local bodies/State Govt. Agencies, Scholarship to brilliant wards of SB Depositors in rural areas.
       
• High return Term Deposit Account Always offering competitive interest rates in term deposit with 1% more for senior citizens - present highest rate offered is 7.25% per annum for deposits of 36 months & above.

B.   DEPLOYMENT

Credit policies and introducing New Lending schemes

• Schemes for channel financing to meet the both legs of corporate financing - purchase and sale
  

• Special Economic Zone (Mart) financing scheme for firms and companies which intend to start their export/import business in Special Economic Zones (SEZ).
   
  Lending Schemes for rural India
    
• To provide urban amenities in rural area (PURA), Bank introduced various lending schemes for basic infrastructure in village clusters like Rural Telephony and rural kiosks, Rural Health Care, Development of rural Tourism and rural Educational and Vocational Training Institutes.
     
• Implementing 'Tenant Farmers' Financing Scheme' for tenant farmers toiling in others land on oral tenancy basis, giving this neglected sector new hope of life.
       
• Launched Scheme for financing Solar Home Lighting System for popularising use of non-conventional source of energy.
    
• On 142nd Foundation Day, Bank introduced two novel schemes - Mahila Shakti Yojana for empowerment of women folk and General Credit Card Scheme extending personal loan to rural people.
      
  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. Bank's exposure to SME sector is over Rs.2700 crores which is about 10% of net bank credit.
  
  
• Retail Lending
    
  Bank has given more thrust to capture larger market share of retail banking and ensures smooth delivery channels through 241 Retail Banking Boutiques manned by specialized officials.
      
• Other initiatives include:
     
  - The Bank introduced AllBank Gyandeepika Scheme for education loan for   students of nursery to Class XII
       
  - Second time education loan. Life Insurance cover for all education loan
      
  - Reduction of interest in car loan and Saral loan schemes
     
  Total disbursement under Retail Credit up to March,2006 was Rs.2115.93 crores as against Rs.1551.64 crores last year registering a growth of 36.37%. Total outstanding under retail credit was Rs.5136.07 crores as on 31.3.2006 as against Rs.3902.86 crores previous year recording a growth of 31.60%.
      
  Upto 31.3.2006, total education loan including on-line and second time loan, disbursed was Rs.208.35 crores in 10832 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 Indira Gandhi Farmers' & Entrepreneurship Development Institute at Rae Bareily (UP) during the year. Encouraged by wide response from all sections of beneficiaries, Bank has planned to open more such institutes in Western and Eastern UP and in West Bengal.
• Technological Upgradation
      
• 95% of Bank's business has been brought under computerization.
       
• 192 ATMs installed with VISA and National Financial Switch (NFS) connectivity with accessibility from more than 6000 points. Bank has already issued more than 1 lakh VISA International Debit-cum-ATM Cards.
      
• Real Time Gross Settlement (RTGS) live in 97 branches.
     
• Online Tax Accounting System (OLTAS) implemented in all 168 designated branches.
      
  Overseas Presence - Bank goes international
                 
• Bank has got licence from Hong Kong Monetary Authority (HKMA) for opening the first ever Overseas Branch of the Bank at Hong Kong. The Branch will be opened shortly.
          
• Bank has already got approval of the China Banking Regulatory Commision(CBRC)  for opening a representative office in Shenzhen, China which is underway
       
  Human Capital- HR Initiatives
    
• Managing human resources are considered by the Bank as most important determinant for organizational development. Continuous efforts are made for skilling and reskilling of the officers and employees through 5 internal Training Institutes & reputed external institutes including overseas training.
        
• During the financial year, a total of 7940 officers/ employees have been exposed to training, which constitutes 50.51% of the total work force excluding sub-staff. 487 officers/ employees were trained in external institutes and 9 officers were nominated for overseas training programmes
        
• Bank engaged XLRI as a consultant for drafting comprehensive HR policy document for the Bank. They have submitted report on short-term action points covering categorization of branches/ offices and geographical and functional organization restructuring which are being implemented in phased manner. The Complete Report will be submitted soon.
        
• A massive Competency Mapping exercise has been conducted for Executives/ Officers for putting the right man in right place and for proper succession planning.
       
• The Bank has opened an institute for Research and Technology at Panchkula for IT research and development, IT training & Help Desk for effective IT business transformation.
  
  Joint Venture Initiative
  
     
• The Bank has already got the approval of the RBI for floating a Joint Venture Company for insurance business. The partners in the JV Company will be Indian Overseas Bank, Karnataka Bank Ltd, Dabur Ltd and Sampo, Japan. The regulatory compliance of the company is being formalized for final take-off.
       
  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 conducive environment in which mutual understanding and relationship amongst various stakeholders have strengthened.
   
  ALLBank Finance Ltd
    
   
• All Bank 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 an operating profit of Rs.2.40 crores for the year 2005-06 as against Rs.2.16 crores during the last year.
     
• The subsidiary offers a host of emerging opportunities which are as under:
    
  • Investment Banking
     
  • Insurance Broking
     
  • Stock Broking
     
  • Wealth Management and Portfolio Advisory
     
  • Underwriting

    Managerial Autonomy
  
  Ministry of Finance, Government of India has granted full autonomy/ powers to stronger banks exhibiting good performance. Allahabad Bank has fulfilled all criteria for stronger Public Sector Bank as defined by the Ministry of Finance. This has empowered the Bank with full Managerial Autonomy. The Bank has drawn up an extensive plan for implementation of various operational autonomy for performance development in future.
    

D.   LOOKING AHEAD - PROSPECT OF A BRIGHTER FUTURE
                 
          Fully equipped to face the emerging challenges before us:
                      

• Automation: Bank has made strategic plan for extensive mechanization of operations by the year 2006-07. Some of the steps envisaged are :
  a) Centralized Banking Solutions (CBS) in 900 Branches. Computerization of 100% business by June, 2006
  b) 250 more ATMs, 50 Cash Dispensers will be installed
  c) Installation of 50 number touch screen kiosks to provide rural/semi-urban customers various information regading their accounts.
       

Overseas Appearance: Bank is slated to go international early part of 2006-07 with

a) Branch at Hong Kong
b) A representative office at Shenghen, China
   

• Human Resources restructuring:
  a) Competency Based Training (CBT) will be implemented for creating an ideal environment for learning, relearning on an on-going basis.
  b) HR restructuring on the basis of revised HR policy documents suggested in the report of XLRI.
      
  Other future Initiatives
     
  Projecting a business growth rate of 27% targeting Rs.1,00,000 crore by March-end, 2007.
       
• Continuing endeavour to open more intergrated, comprehensive and holistic training model in line with Indira Gandhi Farmers' & Entrepreneurship Development Institute at Tirwa (UP) and Bolpur (West Bengal.
     
• Thrust on low-cost Deposit accounts like Saving Bank and Current
    
  More aggressive marketing of cross selling of insurance and mutual fund products with more emphasis on income generated.
     
• Pressing into market more attrative retail lending products.
     
• Opening of a Joint Venture Insurance Company with foreign partner M/s Sampo, Japan. Indian partners are Indian Overseas Bank, Karnataka Bank Ltd and M/s Dabur
     
• Opening of round-the-clock Call Centres for customers care.
     
  Kolkata