ALLAHABAD BANK CONTINUES ITS MARCH TOWRADS NEW HEIGHTS

The Business of the Bank has reached to Rs.62,914 crores as on 31.03.2005

HIGHLIGHTS OF PERFORMANCE :

• The Business of the Bank has reached to Rs.62,914 crores as on 31.03.2005.

• Year-on-Year basis, the Business increased by 31.44% against the growth of 22.9% in the corresponding period last year.

• Total Deposits of the Bank grew by 29.5% during 2004-05 to Rs.40,762 crores as against a growth of 23.6% during the corresponding period last year.

• Market Share in aggregate deposits increased to 2.25% as on 25.03.2005 from 1.96% as on 26.3.2004.

• Gross advances increased by Rs.5764 crores, i.e. by 35.17% over previous year to touch Rs.22,152 crores.

• Credit-Deposit ratio increased to 54.34% as at March-end 2005 from 52.93% as at March-end 2004.

• Net NPA to net advances reduced to 1.28% as on 31.03.2005 from 2.37% as on 31.3.2004.

• Gross NPA to gross advances declined to 5.80% as on 31.03.2005 from 8.66% as on 31.3.2004.

• EPS (annualised) increased to Rs.15.63 from Rs.13.37 during this period.

• Book Value per share improved to Rs.67.14 from Rs.44.76 during this period.

• Cost of Deposits reduced to 5.00% during April-March, 2005 from 5.63% during 2003-04.

• Productivity (Business per employee) increased to Rs.2.82 crores during 2004-05 as against Rs.2.15 crores during 2003-04.

• 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.

PROFITABILITY

• Operating Profit of the Bank during 2004-05 increased to Rs.1072.62 crores from Rs.876.25 crores during 2003-04, showing a growth of 22.41%.

• Net Profit of the Bank increased to Rs.541.80 crores during the period under review from Rs.463.38 crores during the corresponding period last year, registering a growth of 16.92%.

• During the quarter ended March,2005, the operarting profit of the Bank was Rs.221.04 Crores as against Rs.320.17 Crores in the corresponding quarter last year. However operating profit excluding profit on Sales on Investment increased to Rs.200.53 Crores from Rs.99.64 Crores during this period.

BUSINESS GROWTH

• The Bank’s total business registered a growth of 31.44% during 2004-05 as against 22.89% during 2003-04. The Business of the Bank has increased to Rs.62914 crores as at March-end 2005 from Rs.47,865 crores as at March-end 2004.

• Deposits grew by 29.50% during 2004-05 as compared to 23.62% in the corresponding period last year.

• Gross Advances grew by 35.17% against the growth of 21.51% during the period under review.

• Non-Food credit grew by 36.30% during 2004-05 as compared to 25.93% during 2003-04.

• As on 31.3.2005, aggregate deposits of the Bank increased by Rs.9130 crores or 29.49% as against the growth of Rs.6270 crores or 25.40% in the corresponding period last year. The market share of aggregate deposits of the Bank increased to 2.25% as on 25.3.2005 from 1.96% as on 26.3.2004. The Market share of Credit increased to 1.96% from 1.85% during this period.

SOCIAL BANKING

• A multi pronged strategy was put in place during 2004-05 to augment the credit flow to various sectors/ schemes under priority sector with thrust on agriculture. The total PSC of our bank grew by 31.05% to Rs.9752.83 crore as on March, 2005 from Rs.7442.27 crore as on March 2004. The percentage of total priority sector credit of the Bank to net bank credit stood at 44.14%.

• The outstanding agriculture credit increased from Rs.3062.55 crore as on March,2004 to Rs.4202.56 crore as on March,2005 registering growth of 37.22% and constituting 19.01% of the net bank credit. Against the target of Rs.1102 crore, fresh disbursement of agriculture credit fixed by the Government of India/RBI for the year 2004-05, our achievement was Rs.2025.97 crore.

• Fresh Kisan Credit Cards(KCCs) involving an amount of Rs.613.36 crore were issued to 173252 farmers during the year 2004-05 taking the total card base of the Bank to 587740 involving Rs.1754.35 crores. The credit to SSI and other priority sector also increased by 16.28% and 31.24% to Rs.1538.32 crores and Rs.4011.95 crores, respectively during 2004-05.

• The Bank has revamped its agricultural credit operations by adopting fresh policy decision and by formulating new product lines, which suits the requirements of farming community.

RETAIL BANKING

• The Bank’s thrust in retail credit has resulted in increase in outstanding credit by Rs.584 crores during the year from Rs.3183 crores as at March-end 2004 to Rs.3767 crores as at March-end 2005.

FEE BASED BANKING

• To improve the fee-based income, the Bank has made tie-up with GIC and LIC to sell their insurance products and UTI mutual funds to sell their mutual fund products through Bank’s branches. The Bank has deployed 135 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, more than Rs.10 crores premium income (both life and non-life) has been procured during the period.

NPA REDUCTION

• The Bank has put in place the Risk Management Systems to identify, measure and mitigate Credit, Market and Operational Risk for its various operations. The Bank is adopting Standardised Approach for Credit Risk and Basic Indicator approach for Operational Risk. The Bank has also developed its own internal risk rating system for all its borrowal accounts. The Bank has drawn a road map for timely compliance of requirement under Basel II norms.

• Net NPA ratio declined to 1.28% as at March-end 2005 from 2.37% as at March-end 2004. Gross NPA declined to 5.80% as on 31.3.2005 from 8.66% as on 31.3.2004.

• Gross NPA amount declined to Rs.1284.27 crores as on 31.3.2005 from Rs.1418.46 crores as on 31.3.2004. Net NPA amount also declined to Rs.270.70 crores as on 31.3.2005 from Rs.362.83 crores as on 31.3.2004.

• NPA Provision coverage ratio went up to77.92 % as at March-end 2005 from 73.75% as at March-end 2004.

FOLLOW-ON PUBLIC

• In order to augment the capital base of the Bank to fund future business growth and to meet increased capital requirement under BASEL II norms, the Bank decided to raise capital from market.

• Pursuant to the approval received from the Board of Director, Shareholders and Ministry of Finance, Govt. of India, the Bank came out with its second public issue of 10 crore equity shares of the face value of Rs.10/- each through Book Building process. The issue opened on 6^th April 2005 and closed on 12^th April 2005 and the price band was fixed between Rs.75/- to Rs.82/- per share.

• While the QIB portion was oversubscribed by over 19.6 times, the overall issue was subscribed over 9 times. The FIIs have bid aggressively for our Bank’s stock. Within the QIB category, the FIIs participation was more than 59%. All other categories viz., Retail, HNI, Employees and Shareholders were also oversubscribed.

• Over 94% of the bids were received at the upper price band of Rs.82/-. The Bank fixed the price at Rs.82/- per share.

• The success of the second public issue proved confidence of the global as well as domestic investors on the potential and strong fundamentals of the Bank.

BRANCH NETWORK

• The Bank has 1951 branches as on 31.3.2005, of which 960 are in Rural, 334 in Semi-Urban, 391 in Urban and 266 in Metropolitan areas. The Bank has also 143 Extension Counters spread all over India.

HUMAN CAPITAL

• 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.

• During the financial year, a total of 9981 officers/ employees have been exposed to training, which constitutes 63% of the total work force excluding sub-staff.

• 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.

GEOGRAPHICAL DISTRIBUTION OF BUSINESS

TECHNOLOGY NETWORK

• The Bank has made an aggressive technology plan to increase its Business Volume, Customer Satisfaction and profitability.

• The IT strategy of the Bank involves

1. Implementation of CBS in 400 branches covering Retail, Corporate, Trade Finance, Government Business, General Banking, MIS & Reports.
2. Networking Strategy covering 400 location and controlling offices.
3. Data-ware housing, Customer relationship management, Asset-Liability Management, Human Resource Management etc.
4. Establishment of delivery channels including Internet banking and SMS banking.
5. Establishment of Help Desk and Call Centres for improved customer service.

• M/s Ernest & Young have been engaged as consultant to extend their expert guidance and counsel for formulating IT strategy and Business Process Re-engineering (BPR) needs of the Bank, suggesting training needs and implementation of CBS in 25 pilot branches.

• For implementation of CBS, the Bank has segmented its branches in three groups 1) Retail Branches, 2) Corporate Branches and 3) Rural Branches.

• At present, the Bank has 100 ATMs and planned to increase the ATM network to over 350. The Bank has also planned to join National Financial Switch Network for providing better services to the customers.
  

ALLBANK FINANCE

• The Bank has drawn up a revamping plan for its own subsidiary, M/s AllBank Finance Ltd. that is a well-capitalized Company with a paid up capital of Rs.60 crores.

• The emerging opportunities are identified are

a) Investment Banking (including structured Finance & Debt Advisory)

b) Insurance Broking

c) Stock Broking

d) Wealth Management & Portfolio Advisory

e) Underwriting

 

MANAGERIAL AUTONOMY

• Ministry of Finance, Government of India has granted further autonomy/ powers to stronger banks exhibiting good performance. The minimum eligibility criteria vis-à-vis standing of Allahabad Bank is given below.

Criteria for Autonomy

• Allahabad Bank has fulfilled all criteria for stronger Public Sector Bank as defined by the Ministry of Finance. This has empowered the Bank with further Managerial Autonomy. The Bank has drawn an extensive plan for implementation of various operational autonomy for harnessing its business in future.

LOOKING AHEAD

• The Bank has projected a business growth of 27% for the current financial year. Total Business is estimated to exceed Rs.80,000 crores as at March-end 2006.

• Total Deposit is projected to grow by 25.1% to reach to Rs.51,000 crores in March 2006. Thrust has been given to increase the share of Low-Cost Deposits as at March-end 2006.

• Gross Credit is projected to grow by 30.9% to reach to Rs.29000 crores as at March-end 2006. Credit to Infrastructure and Agriculture will comprise a significant portion of the projected growth in line with the Government policy.

• To improve the internal functioning, the Bank has planned to conduct Management Audit of its Zonal Office, Exceptionally Large Branches and Very Large Branches.

• In terms of Government guidelines, our Bank has been awarded autonomy for taking quicker decision for recruitment of specialized officers, rationalization of branches, Transfer/ Posting/Placement of its existing employees.

• The Bank is in process for finalization of establishing its presence at Kazakhstan in Joint Venture with Punjab National Bank and a full-fledged branch in Hong-Kong.

• The Bank has also planned to open a representative office at China.

Kolkata
9th May 2005.