Allahabad Bank to offload NPAs worth Rs 540 cr

Allahabad Bank, Kolkata-based public sector lender today said it is in the process of implementing a three-pronged strategy to rein in the NPAs, which had dented its net profit in the second quarter in the current fiscal.

Shubhalakshmi Panse, chairman and managing director Allahabad Bank said as part of the strategy, the lender is trying to offload Rs 540 crore worth of Non-Performing Assets (NPAs) before the end of the fiscal.

"The strategy will be appointing a general manager to look after the credit management, doubling the recovery target and off-loading a part of Rs 2,300 crore NPAs. With these measures, we hope to control the NPAs," Panse told reporters in a press conference.

Allahabad Bank posted 52% dip in the net profit at Rs 234 crore for the second quarter of the current fiscal because of increase in provisioning for non-performing assets and diminishing fair value of restructured accounts.

The Bank had net profit of Rs 488 crore in the July- September quarter of the 2011-12 fiscal. The gross NPAs went up to 2.98% during the quarter.

Panse said he is hopeful of better performance in December quarter compared to the previous quarter on the back of reduction in NPAs and recovery in certain economic sectors, including SMEs, manufacturing and retail.

However, she said that the stress remains to continue on the asset quality and would continue this quarter due to the lag effect of last year even though credit off-take is improving.

As on September 30, 2012, the bank had taken up restructuring of Rs 12,800 crore loan portfolio which includes Rs 5,700 crore loans of various Discoms.

She said the bank is confident of maintaining the net interest margin of 2.8-2.9% by the end of this fiscal.