Allahabad Bank to restructure Rs 540-cr NPAs

“Stress is continuing because of the lag effect. This quarter will continue to feel this and there may be recovery only after that. While most of the restructuring is done, repayment would begin only down the year,” she said. As of September 30, the bank had restructured loans of R12,800 crore, of which R5,700 crore belonged to discoms alone. “The recovery targets have been doubled now from R411 to R900 crore,” she said.

The bank’s net profit for the second quarter had halved to R234 crore from R488 crore in the corresponding quarter last year as it had to made more provisions against NPAs in addition to the decline in net interest income and the net interest margins. The gross NPAs went up to 2.98%.

The bank hopes to see 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 maintained that the stress on the asset quality would continue this quarter due to the lag effect of last year though uptake in credit growth has been visible.