Allahabad Bank To Hit Market With Rs 100-crore IPO

New Delhi, Aug 30: | Updated: Aug 31 2002, 05:30am hrs
Yet another banking issue, Allahabad Bank has firmed up plans to hit the market with a Rs 100-crore initial public offering (IPO). Close on the heels of Union Bank of Indias IPO eliciting overwhelming response, public sector Allahabad Bank is seeking the Securities and Exchange Board of Indias (Sebi) nod for tapping the public.

The bank is offering 10 crore shares of Rs 10 each at par and the public issue is lead managed by SBI Capital. The bank has reserved 1 crore shares for employees and directors and net offer to the public is 9 crore shares. The shares will be listed on the Calcutta, Delhi stock exchanges and the National Stock Exchange.

Against the offer price of Rs 10, Allahabad Banks book value is Rs 29.25 as on March 31, 2002. The raising of fresh equity will enable the bank to improve its capital adequacy ratio which is 10.62 per cent as on March 31, 2002. Allahabad Bank has a product portfolio of trade finance, consumer loans, demat services, credit cards, loans through internet, Kisan cards, etc.The bank has also opened specialised branches to cater to the needs of industrial finance, trade finance, personal banking, international banking, NRIs and small-scale industries.

The bank has a high amount of sticky assets. Its net non-performing assets (NPAs) is 10.57 per cent of its net advances, which amount to Rs 1,160.16 crore as on March 31, 2002. The net NPA has declined to the current level from a high of 15.09 per cent as on March 31, 1998.

The bank is facing 661 cases as on March 31, 2002 including writ petitions filed by employees/ex-employees, suits by customers and consumer cases with a total claim of Rs 133.69 crore. Also, seven proceedings against the bank related to income tax for a total amount of Rs 423 crore are pending with the Income Tax authorities.

Allahabad Banks deposits have been growing at a computed average growth rate (CAGR) of 13.75 per cent and advances have been growing at a CAGR of 18.03 per cent during the past five years. However, the net interest income has grown by only 6.72 per cent in fiscal 2002 compared with 21.27 per cent in the previous fiscal.

The net interest margin has declined from 3.46 per cent in fiscal 2001 to 3.26 per cent in fiscal 2002. Net profit, however, has grown by 101 per cent during the fiscal 2002.