Allahabad Bank posts Q1 net loss of Rs 19.44 bn due to high provisioning

Gross NPAs stood at Rs 250.67 bn at the end of June 2018, against Rs 210.32 bn in the year-ago period

Weighed down by high provisioning, Allahabad Bank posted a net loss of Rs 19.44 billion in the first quarter of the financial year, against a net profit of about Rs 288 million in the same period of the last financial year. However, sequentially, the bank's losses came down as in the last quarter of FY18, the bank had posted a net loss of about Rs 35 billion. 

  

The provisioning for non-performing assets (NPAs) stood at Rs 25.9 billion in Q1 FY19, against Rs 16.86 billion in the same period last financial year.  
 

During Q1 FY19, the bank made a provision of Rs 5.32 billion in respect of nine accounts covered under the Insolvency and Bankruptcy Code (IBC). According to regulatory guidelines issued in August 2017, they made fresh provisions of Rs 6.57 billion for accounts under the IBC. 

The bank's gross NPAs stood at 15.97 per cent of gross advances for the quarter under review, against 13.85 per cent as of June 30, 2017. In value terms, gross NPAs stood at Rs 250.67 billion at the end of June 2018, against Rs 210.32 billion in the year-ago period.  

However, the bank's net NPA ratio improved to 7.32 per cent (Rs 104.1 billion) as against 8.96 per cent (Rs 128.68 billion). The bank's net interest margin (NIM) also improved on a year-on-year basis from 2.35 per cent to 3.18 per cent.

"The loss is on account of provisioning. We have been able to contain slippages. Our provision coverage ratio at 68 per cent is one of the best among public sector banks. Also, the bank booked at the operating profit of Rs 8.30 billion last quarter," said the bank's spokesperson. 

The bank's capital adequacy ratio (Basel III) stood at 6.88 per cent at the end of Q1 FY19, against 11.61 per cent in the same period of the last financial year. The bank has recently received a capital infusion fund of Rs 17.90 billion from the government under the PSB recapitalisation plan for FY18-19. According to a senior official of the bank, it will improve the capital adequacy ratio in the next quarter.

In pursuance of the Reserve Bank of India (RBI) guidelines, the bank has spread the provision for fraud/red flagged accounts (RFAs) of Rs 13.01 billion in 32 accounts as of June 30. Further, a provision of Rs 2.29 billion has been reversed in other Reserves, out of Rs 3.90 billion, related to accounts declared fraud in FY17-18. The bank's scrip closed at Rs 40, down by 6.32 per cent against the previous day's close at the BSE.