Allahabad Bank Q4 net dips 68% on higher provisioning

Allahabad Bank posted 68 per cent decline in net profit at Rs 126 crore for the fourth quarter ended March 31, on account of higher provisioning for non-performing assets and a dip in core income

During the quarter, the bank added fresh slippages worth Rs 2,586 crore. Provisioning increased by 28 per cent to Rs 641 crore, of which, NPA provisions stood at Rs 513 crore.

The bank’s board has recommended a dividend of Rs 6 per share of face value of Rs 10 each.

According to Shubhalakshmi Panse, Chairman and Managing Director of Allahabad Bank, higher accretion of NPAs and the resultant rise in provisioning were the key reasons for the drop in profits.

Asset quality

During 2012-13, the bank added fresh NPAs to the tune of Rs 5,891 crore. Of this, nearly Rs 1,600 crore came from nine accounts, which have either gone for corporate debt restructuring (CDR) or were in the process of being referred to CDR.

A major share of the slippages came from sectors including iron and steel, textiles, food processing and chemical industries, Panse said at a press meet here on Tuesday.

Gross NPA as a percentage to advances increased to 3.92 per cent (1.83 per cent), while net NPA rose to 3.19 per cent (0.98 per cent). The bank would aim to bring down gross NPAs to 3.3-3.5 per cent by March 2014.

Core Income

The drop in net interest income was primarily on account of lower yields on advances due to a base rate cut, interest reversals on bad loans and reduced interest earned on restructured accounts, Panse said.

Higher provisions and reduction in profits also dragged down the net interest margin (NIM) to 2.30 per cent (3.23 per cent).

Deposits grew by 12 per cent to Rs 1.78 lakh crore and advances by 17 per cent to Rs 1.31 lakh crore.

The bank aims to grow its business by over 16 per cent to 3.6 lakh crore by March 2014. The bank would also aim to achieve NIM of three per cent by the end of this fiscal, she said.

Shares of Allahabad Bank closed at Rs 126.50, down by 4.78 per cent on the BSE on Tuesday.

shobha.roy@thehindu.co.in

Source: thehindubusinessline