Allahabad Bank Q2 net climbs 21%

MUMBAI: Allahabad Bank has reported a 21% rise in its net profit at Rs 403 crore for the quarter to September 2010, over Rs 334 crore in the corresponding period last year. Profits were driven by a rise in business, coupled with an improvement in margin. Bank chairman JP Dua attributed the rise to improvement in income from core business.

The bank which saw its total business touch Rs 1.96 lakh crore, aims to cross Rs 2 lakh crore by December and Rs 2.20 lakh crore by March next year, Mr Dua said. The bank’s net interest margin increased to 3.34% for the September quarter compared with 3.10% in the previous quarter. At the start of the fiscal, we announced that we would like to keep NIM over 3%. So far, we have maintained this target, Mr Dua said.

The Kolkata-based bank’s operating profit for the period rose 20% at Rs 782 crore from Rs 650 crore in the corresponding period in 2009. Total income rose 22% to Rs 2,982 crore against Rs 2,452 crore. It made a provision of Rs 379 crore towards non-performing assets, income tax and others.

Mr Dua said the bank had to make a whopping Rs 220 crore of provision only towards NPAs on account of agriculture debt relief scheme. The scheme expired on June this year but a significant chunk of farmers did not avail of the benefit, making them defaulters of bank loans.

Gross NPA ratio deteriorated to 1.77% as on September 2010 from 1.5% three months ago. Net NPAs deteriorated to 0.56% from 0.41% due to rising incidents of defaults in the farm sector. The bank is adequately capitalised with a capital adequacy ratio of 13.49%. Yet, it has headroom of Rs 2,600 crore to raise capital.