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Spike in tax provision, flat other income restricts growth in Allahabad Bank

20 Jan 2009

Allahabad Bank reported mere 1% increase in net profit to Rs 369.5 crore in the quarter ended December 2008, largely due to 523% spike in provision for tax to Rs 193.6 crore and mere 2% rise in other income to Rs 408.4 crore.  The bank did exceptionally well operationally with 45% surge in Net Interest income (NII) to Rs 604.1 crore.  NII surged due to slower 14% growth in interest expenses to Rs 1293.9 crore and healthy 22% rise in interest earned to Rs 1898.0 crore. Hence, its net interest margins leaped to 3.24% in the quarter ended December 2008 from 2.7% in the quarter ended September 2008 and 2.59% in the quarter ended December 2007.


But, the gross NPAs rose by 8% to Rs 1016.0 crore, while net NPAs zoomed by 41% to Rs 429.2 crore.  As the bank allowed surge in net NPAs, it recorded 18% fall in provisions and contingencies to Rs 103.0 crore in the quarter ended December 2008. As a % of advances, the gross NPA declined to 1.93% in December 2008 from 2.06% in December 2007 but the net NPA actually increased to 0.82% in December 2008 from 0.67% in December 2007. The capital adequacy ratio has increased from 11.46% in September 2008 to 12.2% in December 2008, but they were lower than 12.84% in December 2007.crackcrack
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