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| Allahabad Bank may raise Rs 1k crore |
| BS Reporter / Kolkata Jun 16, 2009, 00:05 IST |
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Public sector Allahabad Bank is looking to raise Rs 1,000 crore in the current financial year.
 “We may look at raising about Rs 1,000 crore this year, whenever the market is conducive, as we did last year,” Chairman and Managing Director KR Kamath at the bank’s annual general meeting (AGM) here today.
“We might also look at a rights issue if things are favourable,” he said.
The bank has a headroom to raise about Rs 2,450 crore — Rs 600 crore perpetual debt and Rs 1,850 crore upper Tier II capital.
The bank’s capital adequacy ratio is 13.11 per cent at present. It expects its net interest margin (NIM) to be about 2.75 per cent in 2009-10, as against 2.88 per cent last year. Earlier, the bank had projected NIM of 3 per cent.
“While our effort will be to hold on to NIM of 2.88 per cent, on a conservative basis, it could be 2.75 per cent. The pressure is likely to be due to softening of the interest rate regime compared with third and fourth quarters. There has been pressure on spreads. Also, there is less possibility of repricing upwards some of the accounts,” said Kamath.
He further added, “There is pressure on NIM as there is a demand to reduce lending rates. We will have to adjust reduction in lending rates with our deposits rates.”
The bank has lowered its credit and deposit growth target to 18 per cent this fiscal. In April, Kamath had said he expected 20 per cent growth in credit and deposits. Last year, the bank’s gross credit went up 18.15 per cent and deposits rose 18.65 per cent.
Since the start of the current financial year, the bank’s loan book has grown 25 per cent and deposits 18 per cent on a year-on-year basis.
However, growth in advances and deposits has been marginally lower in the first quarter than in the quarter ended March 31, 2009.
Asked if the bank was contemplating reduction in interest rates, Kamath said, “As of now, we are operating in a soft interest regime. There were signals from the Reserve Bank of India that the rates should come down. We will respond to it as far as possible.”
Kamath said the share of loans extended below the benchmark prime lending rate, known as sub-PLR loans, dropped from 71 per cent at the end of 2007-08 to 64 per cent in 2008-09.
Delisting from CSE
In view of cost and compliance issues, the bank passed a resolution to delist from the Calcutta Stock Exchange (CSE).
Bulk of trading in the bank’s shares takes place on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
There was no trade in the bank’s shares on the CSE during 2007-08 and 2008-09, according to the bank’s annual report.
“The CSE did not provide any significant tangible benefit to the shareholders of the bank, and delisting would help reduce costs incurred in the form of payment of annual fees to the CSE and for compliance of various statutory requirements,” said the report.
Kamath said that there was no business at the CSE, and the BSE and NSE provided investors online access to the shares of the bank.
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