Allahabad Bank net dips 83% on high provision

Kolkata-based Allahabad Bank has reported nearly 83 per cent fall in net profit to Rs 41.68 crore for the second quarter ended September 2008 against Rs 239.78 crore in the corresponding period last year.

The drop was on account of provisioning of Rs 272.53 crore for bad and doubtful debts in the quarter against Rs 59.77 crore in the corresponding period last year and also as a result of depreciation in investments.

The bank has set aside Rs 110 crore for bad and doubtful debts, mainly on account of the debt waiver scheme, said K R Kamath, chairman and managing director, Allahabad Bank.

 

The rest of the provision was on account of depreciation in investments, which also included a loss because of conversion of available-for-sale (AFS) securities to the held-to-maturity (HTM) category.

Of the total investment portfolio, the bank has changed the ratio of the HTM securities to 73.81 per cent, enabling a shift of Rs 3,266 crore to HTM from AFS. For this, about Rs 155 crore was set aside in the second-quarter results.

Kamath said, “This quarter has been challenging for the bankers. The impact of the financial turmoil is seen on Indian banks also. The debt waiver has been factored in this quarter. The results have also been vitiated by market vagaries.”

The total income of the bank for the second quarter was Rs 1,977.19 crore, against Rs 1,664.28 crore in the same quarter last year, an increase of 18.80 per cent.

The bank’s non-interest income, including trading profit, was Rs 144.01 crore for the quarter against Rs 155.72 crore for the same quarter last year.

Total deposits of the bank stood at Rs 73,648.46 crore for the quarter ended September, an 11.76 per cent rise over those in the same period last year. Gross advances grew by 21.51 per cent for the quarter at Rs 51,715 crore. The net interest earned on advances stood at Rs 1,356.65 crore against Rs 1,074.84 crore in the same quarter last year.