Public sector lender Allahabad Bank on Friday reported close to 8% year-on-year growth in its net profit to Rs 70.20 crore for the quarter ended September 30 from Rs 65.03 crore for the same period a year ago, buoyed by a strong growth in its operating profit, although its provisions to cover bad loans rose by more than two times. The Kolkata-based bank’s asset quality worsened further in the September quarter this fiscal as its gross non-performing assets (NPAs) in absolute term rose 12.4% y-o-y at Rs 21454.27 crore as compared to Rs 19094.53 crore in the corresponding period of last fiscal. In order to bring down a substantial amount of its bad loans through corporate insolvency resolution process, the bank has identified 20 stressed accounts for referring to the National Company Law Tribunal (NCLT). In these 20 accounts, it has a total exposure of around Rs 908 crore.
Talking to reporters after announcing the results, bank’s managing director and chief executive officer Usha Ananthasubramanian said recovery of bad loans was the major focus area. Allahabad Bank has exposure to 10 of the 12 large stressed accounts, which have been featured in the first list of the Reserve Bank of India (RBI). Its overall exposure to these 10 accounts is around Rs 4429 crore. Further, the lender has exposure to as many as 13 of the 29 firms, identified by the RBI to be resolved through any of its schemes before December 13, failing which cases should be filed against these firms under IBC at the NCLT before December 31.
Ananthasubramanian said, during the September quarter of FY18, fresh slippages stood at around Rs 2,000 crore as against Rs 2,240 crore for the same period of FY17. “Fresh slippages in the second quarter was mainly due to failure of many SDR cases,” she added. The bank’s gross NPA as a percentage of total loans rose to 14.10% in the September quarter this fiscal from 12.28% during the same period last fiscal. Consequently, NPA provisions during the quarter grew over 112% y-o-y at Rs 1469.52 crore compared to Rs 692.08 crore for the corresponding quarter a year ago.
Despite a heavy rise in provisions, the lender posted a growth in its net profit as its operating profit surged by 26% y-o-y at Rs 1222.93 crore on the back of a strong growth in other income and a reduction in cost of deposit. Other income grew 39.5% y-o-y at Rs 877.78 crore during the period under review, while cost of deposit reduced to 5.46% in the quarter as against 6.02% in the same period last year.
During the second quarter this fiscal, net interest income (NII) fell around 7% y-o-y to Rs 1254.46 crore from Rs 1349.43 crore in the corresponding period last fiscal. Net interest margin (NIM) also fell to 2.37% from 2.67%.
The bank was planning to raise around Rs 1,000 crore through qualified institutional placement (QIP) issue during the third quarter of FY18. At the end of the second quarter, its capital adequacy ratio as per Basel III norms stood at 11.74%.