The Hindu Business Line : Growth in other income boosts Allahabad Bank profit 30%

Speaking to newspersons after announcing the bank’s results for the year ended March 31, 2008, Mr A.C. Mahajan, Chairman and Managing Director, said the target was to achieve a business growth of Rs 1.5 lakh crore during 2008-09.

The bank has headroom to raise Rs 1,900 crore through a mix of instruments. Mr Mahajan said that they would also approach the Government for a rights issue. “We will approach the Government and ask them to replicate the model (that of a rights issue) they have adopted for State Bank of India,” he said.

The capital adequacy ratio of the bank stood at 12.04 per cent as on March 31, 2008. The bank has posted a 30 per cent growth in net profit at Rs 974.74 crore for the year ended March 31, 2008, against Rs 750.14 crore during the corresponding period of last fiscal due to a growth in other income and fee-based income.

Other income went up by 127.49 per cent at Rs 856.3 crore (Rs 376.4 crore) while the fee-based income increased by almost 25 per cent at Rs 438 crore (Rs 350 crore).

The net interest margin declined to 2.78 per cent (2.97 per cent). The bank plans to focus on retail lending. The retail portfolio of the bank stood at about Rs 17,800 crore.

“Our retail portfolio has grown by a meagre 5-6 per cent during the year because we have been conservative in our lending, following the concerns by the government and the Reserve Bank of India,’ said Mr Mahajan. It has reduced the rates of interest in its auto loan and educational loan sector in order to boost demand.

The net interest income grew by 1.72 per cent at Rs 1,780.8 crore (Rs 1,750.7 crore) and total business by 20 per cent at Rs 1,21,928 crore (Rs 1,01,457 crore). Deposits and advances increased by 20 per cent each at Rs 71,616 crore and Rs 50,312 crore, respectively.

NPAs decline

The net non-performing assets of the bank declined to 0.80 per cent (1.07 per cent). The bank plans to roll out a debt-swapping scheme for farmers in order to free them from the clutches of private moneylenders and bring them to institutional credit fold.

“We have identified nine districts in Uttar Pradesh which have been affected by successive droughts,” said Mr Mahajan. The total amount disbursed per farmer under the scheme would be Rs 25,000 and the rate of interest would stand at 9.75 per cent, he said.

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Growth in other income boosts Allahabad Bank profit 30%