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Wednesday, Jan 25, 2006


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Corporate Results - Public Sector Banks

Allahabad Bank net rises 41 per cent

Our Bureau

Kolkata , Jan. 24

FOR the quarter ended December 31, 2005, Allahabad Bank's net profit amounted to Rs 224.30 crore compared with Rs 159.25 crore in the same period last year, posting a growth of 41 per cent, even after absorbing increased establishment costs mainly due to wage revision and lower profit from sale of investment.

Mr O.N. Singh, Chairman and Managing Director, while briefing newspersons here on Tuesday about the bank's third quarter performance, attributed the jump in profit to several factors such as 33 per cent growth in advances, higher yield on advances at 8.86 per cent (8.7 per cent), rise in non-fund and non-interest income to Rs 65.03 crore (Rs 45.95 crore) and the drop in the ratio of other operating expenses to total expenses to 13.4 per cent (14.7 per cent).

The recovery from the written-off accounts amounted to Rs 40 crore and the bank could reduce the net NPA ratio to 0.83 per cent (1.48 per cent).

Meanwhile, the bank proposes to expand its operations in the southern region. "We would like to go to the southern region in a big way where the credit absorption capacity is high," he said.

Allahabad Bank has been toying for some time with the idea of acquiring a south-based bank to push growth.

Mr Singh hinted at the possibility of re-pricing of the bank's assets.

"The rise in repo rate will entail rise in interest rates on term deposits, which in turn might lead to rise in the interest rate on term loans," he said.

He did not rule out the possibility of an upward revision of the interest rates on housing loans.

"We will not go for re-pricing of assets unless it is absolutely necessary," he said pointing out that the bank so far did not face liquidity crunch because of the prudent management of the liabilities and assets.

"We dwelt at length on excess SLRs to meet our liquidity requirement," he said.

For the same reason, Allahabad Bank, as the CMD pointed out, did not go for Tier II capital which was costly.

"We could raise up to Rs 1,000 crore by way of Tier II but we did not opt for it," he said.

TCS would provide the software support and IBM the hardware in the bank's bid to implement centralised banking solutions.

"About 10 pilot branches will be launched by April/May and by March 2007 all 900 branches identified for first phase CBS will be covered", he said. The cost will involve an estimated Rs 225 crore, he added.

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