Allahabad Bank Marches Forward

The Bank has finalized its accounts for nine-month ended December 2006. During the first nine-month of the current financial year, the Bank has been able to sustain its growth momentum. The accelerated growth has taken the Bank nearer to its business targets for March 07

The highlights of the performance for the nine-month ended December 2006 are summarized as under:

BUSINESS

• The Business of the Bank crossed Rs.95,000 crores mark to reach at Rs.95,237 crores as at December-end 2006.

• Year-on-Year basis, the Business increased by 31.64% as against 22.77% in the corresponding period last year.

• During April-December 2006, the Business grew by 21.23% as compared to 14.99% in the corresponding period last year.

DEPOSITS

Total Deposits of the Bank increased to Rs.56523 crores as on 31.12.2006. On YOY basis, it grew by 26.65% as against 17.01% during the corresponding period last year.

• Total Deposits grew by 16.54% during April-December 2006 as compared to 9.49% during the corresponding period last year.

• Low-Cost Deposits of the Bank grew by 12.00% during the nine-month ended December 2006 as against 11.71% during the nine-month ended December 2005. Year-on-Year basis, the growth was 21.10% as compared to 20.26% in the corresponding period last year.

• Demand Deposits increased by 17.09% during April-Dec.'06 as against the growth of 8.21% during April-Dec.'05. On YOY basis (Jan-Dec.'06), it grew by 33.86% as compared to 25.82% during last year.

• As at Dec-end 2006, the market share of the Bank in Aggregate Deposits increased to 2.32% as against 2.26% in the corresponding period last year.

CREDIT

• Gross credit reached Rs.38714 crores as on 31.12.06. Year-on-Year basis the growth was 39.69% as compared to the growth of 33.33% in the corresponding year last year.

• During April-Dec.'06, Gross Credit grew by 28.78% as compared to 25.11% during April-Dec.'05.

• As at December-end 2006, Market share in Gross Credit increased to 2.18% from 2.04% in December 2005.

PROFITABILITIES - NPAs & Other Ratios

• Operating Profit was Rs.776.70 crores during the April-Dec.'06 as against Rs.690.01 crores during April-Dec'05, registering a growth of 12.56%.

• Net Profit of the Bank increased from Rs.555.63 crores to Rs.624.41 crores during this period, showing a growth of 12.38%. This was despite making a provision of Rs.108.83 crores for mark-to-market requirement for Investment Portfolio, which was Rs.39.99 during the corresponding period last year.

• Last year as at December-end 2005, Operating profit included one time credit of Rs.91.32 crores of very old sundry reconciliation account credit entries. (This year this figure is "NIL").

• Trading Profit of the Bank was Rs.54.60 crores during April-Dec.'06 as compared to Rs.99.45 crores during April-Dec.'05.

• Interest Income grew by 27.86% YOY basis for the nine-month period ending December 2006 over corresponding period last year.

• Cost of Deposits increased to 5.55% as at December 2006 up from 4.97% as at December-end 2005.

• Yield on Advances grew to 9.21% as at December-end 2006 up from 8.70% in December 2005.

• Non-Fund/Non-Interest Income (Commission & Exchange) grew @14.57% to Rs.226.41 in December 2006 from Rs.197.62 crores in December 2005.

• Net Interest Margin (Spread to Average Working Funds) stood at 2.88% as at December-end 2006 down from 3.17% as on December 2005.

• Gross NPA to Gross Advances reduced to 3.06% as at Dec.-end 2006 from 4.52% as at Dec.-end 2005. It was 3.94% as at March-end 2006.

• Net NPA to Net Advances ratio reduced to 0.72% as at December-end 2006 from 0.82% as at December-end 2005.It was 0.84% as at March-end 2006.

• Provision Coverage Ratio was 74.31% as at Dec.-end 2006.

• Provision of Rs.181.83 crores for Advances & Investments were made as on December 2006 as against Rs.102.79 crores as on December'05.

• Capital Adequacy Ratio stood at 12.80%. The Bank is fully prepared for compliance of new Basel II norms.

• Return on Assets (ROA) was 1.42% during April-December'06.

• Operating Expenses to Average Working Fund declined to 1.69% during April-Dec.'2006 from 2.12% during April-Dec.'2005.

• Establishment Cost to Total Expenses fell to 14.79% as at Dec.-end 2006 from 20.76% as at Dec.-end 2005.

• Earning per share (EPS) increased to Rs.18.64 from Rs.16.94 and Book Value increased to Rs.95.37 from Rs.82.60 during the same period

• Business (Fortnightly Average) per Employee increased to Rs.4.04 crores during April-December 2006 as compared to Rs.3.36 crores during 2005-06.

• Gross Credit to Total Deposit Ratio increased to 69.15% as on 31.12.2006 from 62.89% as on 31.3.2006.

ANALYSIS OF Q3 RESULTS:

• The net profit for quarter ended December 31, 2006 stood at Rs.286.13 crores (Q2: Rs.210.03 crores; Q1: Rs.128.25 crores) against Rs.224.30 crores in the corresponding quarter last year, registering a growth of 27.57%.

• Operating Profit was Rs.326.04 crores (Q2: Rs.243.23 crores; Q1: Rs.Rs.207.43 crores) during the quarter under review as against Rs.263.54 crores in the corresponding period last year.

• Total Interest Income increased to Rs.1304.96 crores (Q2: Rs.1145.75 crores; Q1:Rs.1039.05 crores) during the quarter-ended 31.12.2006 as against Rs.945.59 crores during the corresponding previous period, registered a growth of 38.00.

• The Bank could reduce its Net NPA Ratio to 0.72% as on 31.12.2006 against ratio of 0.75% as on 30.09.2006.

• Low-Cost Deposits grew by Rs.1031.62 crores during the quarter under review as against the growth of Rs.856.61 crores in the corresponding quarter last year.

PRIORITY SECTOR LENDING

The Bank has adopted various strategies to improve its lending under Priority Sector Credit particularly in Agricultural and SME Sector. The Bank has disbursed agricultural credit in the tune of Rs.2134.64 crores during April-December 2006.

The Priority Sector Credit of the Bank reached to Rs.14715 crores as on 31.12.2006 from Rs.11663 crores as on 31.12.2006, registering a growth of 26.17%. Agriculture Credit stood at Rs.6643.97 crores, showing a growth of 20.78% over December 2005.

More than 1,32,000 Kisan Credit Cards (KCCs) have been issued during the first nine-month of FY07 as against the target of 1,23,800.

Credit under SME increased to Rs.3207.06 crores as on 31.12.2006, registering an annual growth of 21.29% against the annual target of 20%.

Towards capacity building of Farmers, unemployed youth, women and those belonging to underprivileged section, the Bank also established Indira Gandhi Farmers' & Entrepreneurship Development Institute At Rai Bareli (UP) & Allahabad Bank Farmers' & Entrepreneurs Training Institute at Bolpur (WB). This is conceived by the Bank as an Integrated Model of Training, Credit & Infrastructure.

The Bank has selected two of its Lead Districts viz, Chitrakoot and Lakhimpur Kheri in Uttar Pradesh and one district Hooghly in West Bengal to bring under 100% Financial Inclusion.

RETAIL BANKING

• The total outstanding amount under retail credit as on 31.12.2006 was Rs.6602 crores as against Rs.5135 crores as on 31.3.2006 and Rs.4677 crores as on 31.12.2005, registering a growth of 28.57% during April-December 2006 as compared to 19.84% during April-Dec.'05. On YOY basis, the growth 41.15%.

• The Bank has bouquet of Retail Credit Products to cater to the needs of all sections of the society.

• The Bank has 236 Retail Banking Boutiques (RBBs), which are solely focused on Retail Lending. The Bank has further planned to increase its RBBs in the Tier II/Tier III towns to boost and spread out its Retail Credit base.

• Housing Finance to individual accounts stood at Rs.2858 crores as on 31.12.2006, registering a growth 29.01% over December 2005.

TECHNOLOGY NETWORK

• The Bank has joined the elite club of CBS banks having rolled out its first CBS branch on 23rd Oct'06. During the quarter ended December 2006, 5 more branches came under CBS. The Bank is expected to have 400 CBS branches by FY ending 2008 and 900 CBS branches by FY ending 2009.

• The remaining branches will be on Bank's common software, source code of which has been procured from the vendor, but customized to our requirements at Bank's Institute for Research and Technology, at Panchkula and the entire support for the software will be provided in-house.

• The Bank has connected 206 ATMs through ATM Switch installed at Navi-Mumbai.

• The Bank has computerized 1954 branches out of 2046 branches.

JOINT VENTURE INITIATIVE

The Bank has incorporated a new non-life joint venture insurance company with Indian Overseas Bank, Karnataka Bank Ltd., Dabur Investment Corporation and Sompo Japan Insurance Inc. The company is called Universal Sompo General Insurance Company. The approval from IRDA is yet to be received to start its operation. This is going to be the first venture of Public Sector Banks in the Non-life Insurance Sector in India.

FUTURE INITIATIVES

Banks first overseas branch at Hong Kong will be operationalised in February 2007, for which all formalities have been completed.

Thrust on Resource Mobilisation with special emphasis on Low-Cost Deposits.

Aggressive marketing of cross-selling of insurance and mutual fund products with more thrust on income generation.

Renewed thrust on Customer Service and Grievance Redressal.

400 CBS branches by year ending FY-2008 and 900 CBS branches by FY 2009.

The Bank has improved its performance and established its visibility and strong presence in the market. The Bank has to move at a faster pace to consolidate its position in the coming days and improve further.

Kolkata
January 24, 2007.