Allahabad Bank Net Slumps 42%

The public sector Allahabad Bank, has reported a decline in net profit at Rs 39.91 crore in 2000-01 against Rs 69.33 crore in 1999-2000.

"Reduction in net profit was on account of provisions made for its recently concluded voluntary retirement scheme (VRS), pension and gratuity liabilities and an increased provisioning made on advances", chairman and managing director B Samal said. The fall in profit level was also attributable to a Rs 66 crore outgo on account of VRS.

Provisions at Rs 226.09 crore was mainly on account of NPA and interest depreciation at Rs 143.31 crore and Rs 55.64 crore respectively.

The bank's NPAs stood at Rs 1,821 crore. Capital adequacy ratio for the period decreased to 10.5 per cent from 11.51 per cent in 1999-2000.

Business conducted stood at Rs 30,422 crore against Rs 26,525 crore in the previous fiscal. Total deposits, as on March 2001, was Rs 20,106 crore against Rs 17,642 crore. Advances, on the other hand, registered a 16.1 per cent growth to Rs 10,316 crore against Rs 8,883 crore.

The bank recorded a total income of Rs 2,310.35 crore against Rs 2102.51 crore in the previous fiscal. Interest on advances amounted to Rs 1064 crore while its fee-based income was Rs 142 crore. On the expenditure front, the bank incurred a huge Rs 480.72 crore on establishment head and Rs 66 crore for VRS against a total expenditure of Rs 2270.44 crore.

"We have targeted Rs 35,000-crore business in the current fiscal. Net advances and deposits are expected to grow by Rs 2000 crore each", Samal said. The bank targets Rs 12,000 crore advances.

Samal said he expects to sanction Rs 600 crore through its 100 existing boutiques. The bank will add another 100 this year. While the bank expects to invest a small one per cent of its funds in real estate, it will also focus on individual house building loans. Agriculture lending will form a major portion of its loans sanctioned. The bank has allocated nine per cent to the steel industry while its investment in the textile sector is 5.6 per cent.

It has also has drawn up plans to provide retail trade finance. The bank is to make the schemes available at ten centres which will subsequently be extended to other centres. Also on the list is a loan scheme for women entrepreneurs.

Meanwhile, net investments rose six per cent to Rs 8,719 crore against Rs 8,229 crore in the previous fiscal. Reduction in yield ratio took the bank spread to Rs 680.86 crore from Rs 564.22 crore.

Yield on advances was down from 11.47 per cent to 11.31 per cent. Yield on investment was marginally down from 11.11 per cent to 11.04 per cent. Yield on funds was also marginally down from 7.78 per cent to 7.44 per cent. Cost of fund as percentage of advances was down from 7.81 per cent to 7.51 per cent.

The bank has drawn up a quarterly business plan whereby it will have a quarterly target that will be evaluated every three months. On the technology front, the bank plans to link all its ATM's this year.