Allahabad Bank loss narrows to ₹733 cr

Kolkata-based Allahabad Bank saw its losses narrowing to ₹733 crore for the quarter ended December 31, 2018, compared to a net loss of ₹1,264 crore in the same period last year.

Net interest income was up nearly 4 per cent to ₹1,399 crore during the quarter under review, compared to ₹1,347 crore during the year-ago period. Total income was almost flat at ₹4,757 crore (₹4,755 crore).

The bank is hopeful of making a turnaround and coming out of the Prompt Corrective Action (PCA) framework of Reserve Bank of India by June 2019, said SS Mallikarjuna Rao, MD and CEO, Allahabad Bank.

“We should post a turnaround by June 2019 and be able to present ourselves before the regulator for a review of PCA status,” Rao told newspersons here on Wednesday.

Last week, the RBI lifted lending curbs on three out of 11 weak public sector banks, which were under PCA. Banks under the PCA framework have restrictions in lending and expanding business.

Asset quality, recovery

Allahabad Bank is hopeful of resolution in 10 of the accounts referred to the NCLT, with total exposure of ₹2,729 crore.

In all, the bank has close to 140 accounts in the NCLT, with a total exposure of around ₹18,000 crore.

“We are hopeful of recovering close to ₹1,400 crore from these 10 accounts after around 50 per cent haircut by the end of this fiscal,” he said.

The bank expects a write-back of about ₹350 crore from these accounts. Total slippages during the quarter under review was close to ₹2,540 crore, up from an earlier expectation of less than ₹2,000 crore.

The bank has a total exposure of about ₹1,245 crore to IL&FS, covering 12 to 13 accounts.

Of this, ₹300-crore exposure in three accounts turned NPA. The rest of the accounts, worth ₹900 crore, are in standard category, he said. The percentage of gross non-performing assets to advances increased to 17.81 per cent (14.38 per cent). Net NPA, however declined to 7.70 per cent (8.97 per cent), year-on-year.

Provision coverage ratio improved to 69.64 per cent (53.73 per cent). The bank, which has received close to ₹4,844-crore capital infusion from the government so far this fiscal, will seek further capital infusion from the government by March 2019.

The government shareholding in the bank currently stands at about 83 per cent.

However, this needs to be brought down to 75 per cent by October 2020, as per regulations. The bank will go to market in tranches to reduce the government stake after March 2019, he said.

Allahabad Bank, Rao said, is evaluating valuation of its stake in Universal Sompo General Insurance Company.

“We are looking at all options – whether to exit fully or partially. A consultant – Choice Capital – has been appointed for evaluation. We expect the evaluation to be completed by the end of this month,” he said.

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