Allahabad Bank reports another quarter of poor results

Allahabad Bank reported another quarter of disappointing results for the quarter to March. The net profit of the bank has declined 69% year-on-year due to higher provisioning and deterioration in asset quality.

The asset quality of the mid-sized public sector bank deteriorated sharply with fresh slippages jumping 150% compared to the last quarter. About nine accounts amounting to Rs 1600 crore added to the stress in this quarter. Even on the restructured accounts front, the bank added Rs 1970 crore taking the total restructured book to Rs 14875 crore. The bank has reported a higher gross non-performing assets ratio of 3.9% this quarter.

On the business front, the net interest income declined by a sharp 18%. This was primarily on account of lower yields on advances due to a base rate cut, interest reversals on bad loans and reduced interest earned on restructured accounts.

The bank’s bottom line took a big hit due to higher provisions on account of stress on assets. To add to this, higher provisions on gratuity, pension and wage settlement also accounted for this increase.

The scrip fell by over 3.5% due to the disappointing results. However, the management is confident of bringing the non-performing loans to 3-3.5% this year. Also the asset quality is expected to improve with no strong pipeline of stressed assets and strong recoveries by the bank.