Allahabad Bank jumps 11% as govt approves capital infusion of Rs 2,153 cr

Shares of Allahabad Bank bounced 10.98 per cent to Rs 19.70 per share on the BSE on Friday after the state-owned bank said the President has sanctioned fresh capital infusion of Rs 2,153 crore, to be released during the current financial year of 2019-20.

"The President has sanctioned the release of fresh capital infusion fund of Rs 2,153 crore towards contribution of the Central Government in the preferential allotment of equity shares of the bank during the financial year 2019-20, as Government's investment," the bank said in an exchange filing, post-market hours, on Thursday. 

At 9:34 am, the stock was trading 8.45 per cent higher at Rs 19.25, as against a 0.28 per cent rise in the benchmark S&P BSE Sensex. Nearly 4.6 million shares changed hands till the time of writing of this report.

Infusion of the capital into the bank by the government comes ahead of the merger with Indian Bank, which is expected to help the bank meet the regulatory requirement to get amalgamated with a bigger peer.

In November, Allahabad Bank had informed the exchanges that the government has given in-principle approval to its amalgamation into Indian Bank, where the latter is the acquiror while Allahabad Bank is the transferor.

In August, the government had announced capital infusion into public sector banks to boost lending and improve liquidity situation. While announcing the decision, finance minister Nirmala Sitharaman had said that the move could generate an additional lending and liquidity in the financial system to the tune of Rs 5 lakh crore. Notably, Allahabad Bank had not featured in the list of banks who were approved a total fresh capital infusion of Rs 55,250 crore, as announced on August 30 by the government

Allahabad Bank's net loss widens in Q2 to Rs 2,114 cr; stock tumbles 11%

Shares of Allahabad Bank slipped up to 11.2 per cent to Rs 23.95 per share in the afternoon trade on the BSE on Friday after the bank's standalone loss in the Sepember quarter of FY20 (Q2FY20) widened to Rs 2,114 crore. The bank had incurred a loss of Rs 1,823 crore in the corresponding quarter of the previous fiscal. Besides, the bank's asset quality deteriorated in the recently concluded quarter.

The gross non-performing asset (GNPA) ratio rose to 19.05 per cent in Q2FY20, up from 17.53 per cent YoY. Sequentially, the ratio jumped from 17.43 per cent. As for NNPA ratio, the parameter improved by declining to 5.98 per cent from 7.96 per cent reported in Q2FY19.

In absolute terms, the GNPA came in at Rs 31,468 crore, up 9.6 per cent QoQ from Rs 28,703 crore (Q1FY20). Meanwhile, the NNPA came in at Rs 8,502 crore, up 3.3 per cent QoQ, from Rs 8,230 crore.

"The Bank has made additional provision of Rs. 749.51 crores as at March 31, 2018. Hence, for the FY 2018-19.and half year ended 30.09.2019 no additional provisioning was required to be made as per the said RBI guidelines," the bank said in a statement.

During the quarter Bank has made additional provision of Rs 1982.41 crore over and above the provisions required to be made in terms of Prudential norms issued by RBI, it added. The Non Performing Loan Provision Coverage Ratio of the Bank was 79.30 per cent for the recently concluded quarter.

The bank's profit before tax (PBT) came in at Rs 632.87 crore, up fro Rs 533.97 crore clocked in the year ago period. The bank, however, logged a net interest income (NII) of Rs 1,275.7 crore, up 10.9 per cent YoY, from Rs 1,150.5 crore.

At 3:00 PM, the stock was trading 7.5 per cent lower at Rs 24.95 apiece, as against a 0.58 per cent decline in the S&P BSE Sensex.

Allahabad Bank reports Q1 net profit of Rs 128 cr on good credit growth

Allahabad Bank has reported a net profit of Rs 128 crore in Q1FY20, against a loss of Rs 1,944 crore in the same period of the last financial year.

According to SS Mallikarjuna Rao, MD and CEO of Allahabad Bank, good credit growth and lower provisioning helped the bank book profit. In February this year, the bank came out of RBI's prompt corrective action (PCA) framework, which had imposed restrictions on certain categories of lending.

The bank registered a year-on-year credit growth of 8.75 per cent in the last quarter. The total provisions of the bank in the last quarter stood at about Rs 732 crore, against Rs 2,774 crore in the same period last year. According to Rao, the bank has already provided for around 95 per cent for all accounts referred to NCLT, with a total exposure of about Rs 18,000 crore.

The gross non-performing assets (NPA) of the bank, as a percentage of its total lending, stood at 17.43 per cent in the last quarter, against 15.97 per cent in the same period last year. The net NPA stood at 5.71 per cent in the last quarter, against 7.32 per cent in the same period last year.

In the last financial year, the bank recorded fresh slippages worth Rs 2,986 crore, with agriculture and MSME sectors accounting for a large share. Rao said the bank owes about Rs 1,500-1,600 crore repayment from states on account of debt waiver schemes. A major share is from the government of Madhya Pradesh, which so far has released only about 10 per cent of funds. The bank is expecting repayment of about Rs 1,170 crore by the Madhya Pradesh government alone in the second quarter.

In view of the higher slippages in the agriculture sector, the bank is reassessing the portfolio, said Rao.

Allahabad Bank reports Rs 1,744-cr fraud by Bhushan Power & Steel to RBI

After Punjab National Bank (PNB), another state-owned lender Allahabad Bank Saturday reported fraud of over Rs 1,774 crore by Bhushan Power and Steel to the Reserve Bank of India.

Allahabad Bank in a regulatory filing said on the basis of forensic audit investigation findings and CBI filing FIR against the company and its directors, alleging diversion of funds from banking system by Bhushan Power and Steel Ltd (BPSL), a fraud of Rs 1,774.82 core has been reported by the bank to the Reserve Bank.

Last week, PNB reported a fraud worth Rs 3,805.15 crore by the bankrupt steel company BPSL by misappropriating bank funds and manipulating its books of accounts.

Around 85 per cent of PNB's Rs 4,399 crore exposure to the company had been siphoned off.

Allahabad Bank further said it has been observed that the company has misappropriated bank funds, and manipulated books of accounts to raise funds from consortium lender banks.

The bank has already made provisions amounting to Rs 900.20 crore against exposure of the bank in BPSL, it said.

At present, the case is in the National Company Law Tribunal (NCLT), which is in advance stage and the bank expects good recovery in the account.

It is expected that more banks may report fraud committed by BPSL as the CBI complaint registered in April names several other lenders.

According to the CBI, BPSL diverted around Rs 2,348 crore through its directors and staff from the loan accounts of PNB (IFB New Delhi & IFB Chandigarh), Oriental Bank of Commerce (Kolkata), IDBI Bank (Kolkata) and UCO Bank (IFB Kolkata) into the accounts of more than 200 shell companies without any obvious purpose.

The agency said that the company in doing so had misused the funds and the FIR named chairman Sanjay Singhal, vice-chairman Aarti Singhal, along with other directors as suspects.

"It was further alleged that the said Company availed various Loan facilities from 33 banks/financial institutions during the year 2007 to 2014 to the tune of Rs 47,204 crore (approx) and defaulted on repayments. Subsequently, lead bank PNB declared the account as NPA followed by other banks and financial institutions," the CBI had stated.

Allahabad Bank aims at turnaround, hopes to return in black in this quarter

Allahabad Bank, which posted a loss of Rs 8,334 crore last fiscal, hopes to return in the black going forward on the back of tight recovery mechanism and arrest of fresh slippages, according to its annual report 2018-19.

The Kolkata-based lender registered a loss of Rs 4,674 crore in 2017-18 and a loss of Rs 279 crore during 2016-17.

"Dedicated verticals are in place to ensure recovery of around Rs 2,000 crore per quarter. We expect the bank to break even during Q1FY'20 and thereafter to post net profits consistently.

"The net interest margin is expected to be around 2.65 per cent and visible improvement in cost to income ratio," MD and CEO SS Mallikarjuna Rao said in his address to shareholders.

In January last year, the lender came under RBI's watch-list under the Prompt Corrective Action (PCA) framework due to losses on its books.

However, with capital infusion of Rs 11,740 crore in three tranches during 2018-19, the RBI lifted the restrictions imposed on the lender from February 2019.

The bank is also pursuing reforms agenda --Enhanced Access and Service Excellence -- prescribed by the finance ministry for turnaround of the bank, the report said.

"FY19 was a challenging year for the Indian banking industry due to continued stress faced in asset quality on account of various macroeconomic and other factors.

"The bank is looking at a modest business growth of 9 per cent during 2019-20 through focus on consolidating current account savings account (CASA) base and increasing dependency under retail sector," it said.

The lender expects slippages to moderate and be contained at around 1 per cent per quarter.

The concept of Stressed Asset Management Vertical (SAMV) has been introduced for effective and timely monitoring of NPA accounts and follow up of due process in such accounts, the bank said.

About fund raising plans, the bank said it will be augmenting growth capital during 2019-20 and has obtained board approval for raising up to Rs 4,000 crore through various modes during the year.

On asset front, the bank's gross NPA ratio stood at 17.55 per cent at the end of March 2019, while net NPA was at 5.22 per cent. In 2017-18, the respective figures were 15.96 per cent and 8.04 per cent.

"To improve asset quality, the bank initiated consistent recovery drive and recovered Rs 4,288.83 crore, out of which cash recovery was Rs 2,826.71 crore with a growth of 36.43 per cent due to concerted efforts, daily monitoring and account specific resolution plan," Rao said.

During the fiscal, total reduction in NPA accounts stood at Rs 8,584.33 crore. Allahabad Bank also said it is about to wind up its sole international branch soon. The bank has its overseas branch in Hong Kong.