The Hindu Business Line : Allahabad Bank net falls 82% on higher provisions

Kolkata, Oct. 18 Allahabad Bank has reported 82.5 per cent drop in net profit at Rs 41.68 crore for the quarter ended September 30, 2008, against Rs 239.78 crore during the corresponding quarter of the previous fiscal.

The drop in net profit was mainly on account of a higher provisioning of Rs 272 crore for the quarter, against Rs 59.77 crore during the corresponding quarter of last fiscal, according to Mr K.R. Kamath, Chairman and Managing Director, Allahabad Bank.

“We have made a provision of about Rs 110 crore for bad and doubtful debts and about Rs 139 crore for depreciation on investments. The drop in net profit can be attributed to market vagaries, impact of the agricultural debt waiver and fluctuation in the markets,” said Mr Kamath.

The bank’s net interest income grew by 19 per cent at Rs 494 crore (Rs 415 crore). The net interest margin was at 2.70 per cent (2.60 per cent).

Total income went up by about 19 per cent at Rs 1,977 crore (Rs 1,664 crore).

Total business stood at Rs 1,25,363 crore (Rs 1,08,458 crore). Deposits grew by 11.76 per cent at Rs 73,648 crore (Rs 65,896 crore) and advances by 21.51 per cent at Rs 51,715 crore (Rs 42,561 crore).

Net non-performing assets of the bank increased marginally to 0.85 per cent (0.75 per cent). The capital adequacy ratio was at 11.46 per cent. “Our CAR is at 11.46 per cent post Basel II and we are quite comfortable with it. We have a headroom to raise Rs 2,700 crore by way of Tier II and perpetual bonds. We might consider raising additional capital at the appropriate time,” he said.

Terming the present quarter as a ‘challenging one’ for the entire banking industry, Mr Kamath observed that there might be little improvement in the situation in the third quarter. “It is a challenging time for the banking industry and this is expected to continue for another quarter, post which we are hopeful of doing better,” he said.

There might not be any immediate revision in interest rates on advances, Mr Kamath observed.

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