Allahabad Bank Q2 net profit halves to Rs 141 cr

Higher tax expenses, lower other income hurt earnings

Allahabad Bank on Thursday said its net profit for the quarter ended September 30 nearly halved to Rs 141.44 crore from Rs 275.81 crore in the corresponding period of last year. Higher tax expenses and lower other income impacted the lender's earnings during the quarter.

Tax expenses increased to Rs 285.29 crore in July-September from Rs 135.54 crore a year earlier. The bank provided a deferred tax liability of Rs 20.39 crore during the three-month period on account of a special reserve. The lender said its tax expenses increased primarily on account of operating profit and investment gains.

Net interest income, or the difference between interest income and interest expense, increased 15 per cent from a year ago to Rs 1,504.23 during the quarter.

Other income was at Rs 515.55 crore, down 26 per cent on a year-on-year basis.

Net interest margin improved 30 basis points from a year ago to 3.05 per cent in July-September.

Advances were at Rs 1,39,772.36 crore at the end of September, 2014 compared to Rs 1,31,895.72 crore a year ago. The gross non-performing asset (NPA) ratio deteriorated by 42 basis points to 5.36 per cent, while net NPA ratio improved by 29 basis points to 3.54 per cent.

“We are working very hard on loan recoveries and increase retail credit. That is our focus for now,” Rakesh Sethi, chairman and managing director of Allahabad Bank, told Business Standard.

The state-run lender closed the quarter with a capital adequacy ratio of 10.23 per cent according to Basel-II norms.