Allahabad Bank Q3 net declines 44% at Rs 310 crore

NPA or bad loans of the public sector lender increased to 2.06%

Allahabad Bank today said its net profit for the quarter ended December 31, 2012 fell by 44.5% from a year earlier to Rs 310.83 crore on account of higher provisions and lower net interest income.

Net interest income, or the difference between interest income and interest expense, was at Rs 1,330 crore, down 3.7% year-on-year. Net interest margin also narrowed 71 basis points from a year ago to 3.02% during the quarter.

"Our net profit declined from a year ago due to higher provisions. The increase in provisions was on account of addition of non-performing assets. As per the new norms we had to provide more for restructured advances. We also made provisions in anticipation of wage increases," Shubhalakshmi Panse, chairperson and managing director of Allahabad Bank, said in her post-earnings comments.

The bank made provisions of Rs 343 crore for bad loans and another Rs 132 crore for restructured advances. It also set aside Rs 115 crore in anticipation of 5.5% increase in wages.

Gross non-performing asset ratio deteriorated by 105 basis points from a year ago to 2.91%, while net bad loan ratio increased by 127 basis points to 2.06%. Provision coverage ratio was at 60.97% at the end of last quarter.

Panse said the bank has stepped up its recoveries and witnessed improvement in asset quality on a sequential basis. The restructured loan portfolio was at Rs 13,070 crore.

Gross advances grew by 19.6% year-on-year to Rs 121,555 crore. Deposits were up 17.5% from a year ago at Rs 170,649 crore.

Allahabad Bank closed the quarter with a capital adequacy ratio of 11.96%. The bank has requested the government for additional capital of Rs 1,500 crore.

Shares of the bank today ended at Rs 163.20 on the National Stock Exchange (NSE), down 2.3% from previous close.

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