Allahabad Bank Q2 net up 21% on interest income

Riding on the back of a rise in net interest income and higher margins, Allahabad Bank posted 21 per cent growth in net profit at Rs 488 crore for the quarter ended September 30, 2011, against Rs 403 crore during the corresponding period last year.

On a sequential basis, profits rose 17 per cent from Rs 418 crore during quarter ended June 30, 2011.

The net interest margin during the quarter under review, improved to 3.68 per cent (3.34 per cent) on account of operational efficiency, said its Chairman and Managing Director, Mr J.P. Dua.

Slippages rose by 15 per cent at Rs 520 crore (Rs 453 crore). “The slippages were up primarily on account of some small ticket loans in the micro, small enterprises and agricultural sectors,” Mr Dua said. However, there was no concern regarding asset quality so far and the bank was able to recover Rs 443 crore during the first half of the current fiscal, Mr Dua added.

The percentage of the bank's gross non-performing assets (NPA) to advances was flat at 1.77 per cent, while the percentage of its net NPAs to advances inched up marginally at 0.69 per cent (0.56 per cent).

Allahabad Bank scrip inched up by 8.05 per cent to close at Rs 161.05 on the BSE on Wednesday.

The bank does not have any immediate plan of hiking interest rates on savings bank account, Mr Dua said. “There is adequate liquidity in the system. We will, however, watch the market before taking a call on the issue. We might look at adding some innovative products in the savings bank basket.”

The capital adequacy ratio of the bank was at 12.99 per cent as on September 30, 2011. The bank has approached the Union Government for capital infusion to the tune of Rs 1,000 crore during the current fiscal. Allahabad Bank had received capital support to the extent of Rs 670 crore from the government last year.