Allahabad Bank's Half Yearly Net Profit up by over 123%

Allahabad Bank has set the ball rolling amongst all the listed Public Sector Banks by unveiling its Second Quarter results. Continuing from where it left off after registering a whopping 138% growth in the first quarter of the current fiscal, the Bank today announced a 123% increase in its Net Profit during the half year ended September 2003. Thus, for the first half of the current fiscal, the Bank has posted a Net Profit of Rs. 143.88 crore as against Rs. 64.51 crore in the corresponding period last year, The Bank has registered phenomenal growth under all business parameters during the half year over corresponding half year of previous year.

• Net Profit up by over 123%
   
• Net NPA brought down to 5.21% from 9.18%
    
• Interest Spread as % to Average Working Fund increased from 2.92% to 3.41%
    
• Earning per Share (EPS) increased to Rs.8.30 from Rs.5.23
    
• Book Value per Share increased to Rs.37.89
    
• Cost of Deposits reduced to 5.92 from 6.84%

 PERFORMANCE IN FIRST HALF OF FY 2003-04

NET PROFIT

For the half-year ended September 2003, the Bank has posted a Net Profit of Rs. 143.88 crore as against Rs. 64.51 crore in the corresponding period of the last year, registering a growth of 123.04%. In the previous year i.e., 2002-03 the Bank had achieved a Net Profit of Rs.165.99 crore, for the full year.

OPERATING PROFIT

The Operating Profit of the Bank increased by 49.83% to Rs. 320.66 crore during the first half as against Rs. 214.02 crore in the same period of the last year.

EARNINGS PER SHARE

The Earning Per Share (EPS) surged to Rs. 8.30 (annualised) from Rs. 5.23, thus recording a growth of 58.70%.

BOOK VALUE PER SHARE

The Book Value per Share increased to Rs. 37.89 during the half-year against Rs. 33.76 in March 2003.

CAPITAL RESERVE

The Bank further added Rs. 143.38 crore to its Reserves during the half year raising the same to Rs. 966.97 crore. Capital & Reserves in aggregate stood at Rs. 1313.67 crore.

CAPITAL ADEQUACY

Capital Adequacy (Capital to Risk Assets Ratio) of the Bank increased to 11.08% as on 30.9.2003 from 10.39% as on 30.09.2002 (against stipulation of 9%).

NPA LEVEL

The Net Non Performing Assets (NPA) to Net Advances of the Bank declined to 5.21% as on 30.9.2003 from 9.18% as on 30.09.2002. The Bank is targeting to bring down the Net NPA to below 5% by year end.

During the half-year, NPA recovery through cash and upgradation stood at Rs.113.56 crore compared to Rs. 109.55 crore in the corresponding half-year of previous year. Total reduction in the NPA stands at Rs. 247.84 crore as compared to Rs. 210.00 crore during the same period in the previous year.

Under the Securitisation Act the Bank has issued notices to 1750 defaulters aggregating Rs. 566.13 crore. Arising out of the notices, 414 number of borrowers have come forward for one time settlement for an amount of Rs. 53.54 crore of which 321 number of proposals aggregating Rs. 45.96 crore have already been accepted by the Bank. The Bank has received Rs. 28.07 crore in these accounts.

The Bank is targeting NPA recovery of Rs. 500 crore during the current year.

The Bank has made required provision as per prudential guidelines of the RBI. Moreover, over & above the RBI guidelines, the Bank has made a floating provision of Rs. 101.86 crore. Consequently, the percentage of provision against NPA stood at 59.9% in September 2003 as compared to Banking System’s average of 47.78% in March 2003.

PROVISIONING

A substantial portion of the Operating Profit has been set aside as provision for future contingencies. The Bank has made provision aggregating Rs. 176.78 crore as against Rs. 149.51 crore in the corresponding period last year. The Bank has provided for a sum of Rs. 75 crore towards Income Tax liabilities.

BUSINESS GROWTH

Deposits of the Bank stood at Rs. 27390.28 crore at the end of the half-year as against Rs. 24280.29 crore as on 30.9.2002, registering a growth of 12.81%. High cost deposits were consciously shunned to keep cost of deposits under check. The Bank continues to maintain one of the highest %age of Savings Bank deposit in the industry.

Advances increased to Rs.14121.37 crore at the end of the half-year as against Rs. 12173.43 crore as on 30.9.2002, recording a growth of 16.00%. Non-food credit increased from Rs. 10941.93 crore to Rs. 13278.85 crore, showing a growth rate of 21.36%. Lending under Retail and Infrastructure (Power, Roads, Bridges) received major attention.

During the half-year, disbursements under Retail Finance Schemes were more than Rs. 740 crore. The Retail Credit outstanding of over Rs. 2400 crore now accounts for roughly 18.5% of total credit (non-food) portfolio.

Investments rose to Rs. 14305.26 crore as on 30.09.2003 against Rs. 12376.95 crore as at the end of first half of last fiscal, registering an increase of 15.58%. The Bank has sufficient cushion to meet the volatility in interest rates.

EARNINGS

In the falling interest rate regime, Allahabad Bank is no exception. While the corporates at both private and public sector have been demanding sub-PLR rates, others have been requesting for swapping of their rupee term loans with FCNR (B) loans. As a result of continued pressure on interest earnings the growth in interest earned on advances grew by 11.14% only. However, growth in interest earned on investments is 11.74%. In absolute terms interest earned on advances increased to Rs.652.75 crore from Rs.587.31 crore and interest earned on investments increased from Rs. 572.07 crore to Rs. 639.21 crore.

Yield on Advances stood at 9.66% as against 10.26% for half year ended September 2002. Reduction in interest earnings has been compensated by interest payments on deposits. As a result of our conscious decision to shun high cost deposits and despite an increase of Rs. 3109.99 crore in deposits the interest outgo on deposits declined to Rs.770.61 crore from Rs.788.42 crore. The Cost of Deposit now stands at 5.92% as against 6.84% in September 2002.

SPREAD TO AVERAGE WORKING FUNDS

The Spread to Average Working Fund increased to 3.41% for the half-year-ended 30.9.2003 from 2.92% for the same period of the last year.

SUBSIDIARY

The Board of Directors of Allahabad Bank and AllBank Finance Ltd. (a wholly owned subsidiary of Allahabad Bank) have already approved the scheme of amalgamation of the subsidiary with the parent Bank. The Reserve Bank of India and the Govt. of India have also accorded their no objection to the proposed amalgamation. The decks are now being finally cleared to implement the decision within the current financial year.

Merger of AllBank Finance Ltd. with Allahabad Bank shall benefit the parent Bank in a number of ways viz.,

• Profit earned by the subsidiary shall add to the bottomline of Allahabad Bank

• The amalgamation shall result in reduction of overheads and optimal utilisation of the resources of the subsidiary.

• The CRAR (Capital to Risk Assets Ratio) of Allahabad Bank shall further improve by way of release of the capital invested in the subsidiary

NEW INITIATIVES

On 14th August 2003 the Bank launched AL-AYUSHMAN BIMA YOJANA - a low cost group term insurance plan for its depositors. The Scheme received overwhelming response on the opening day. More than 35000 depositors joined the Scheme on the day of launch.

The Bank has started selling of general (non-life) insurance products under corporate agency tie up with National Insurance Co. Ltd. through 26 young Officers of the Bank who have successfully undergone the 100 hours mandatory training and cleared the regulatory qualifying tests as specified by IRDA.

The Bank has initiated a project to connect all the important/big branches across the country. The connectivity of 67 branches in 9 major cities would be completed within a month from now. Already, 200 branches of the Bank are connected to the Bank’s Intranet using VSAT. For the purpose of centralised reporting, for storage management and dissemination of data and information a Data Center facility is being established within the current financial year.

To promote single window services and multi-delivery channel to improve the customer service the Bank has decided to go in for Centralised Banking Solution (CBS).