Allahabad Bank

The stock yesterday tanked big time on the bourses after it announced its numbers. This is because, irrespective of the earnings, the market was only concerned with the asset quality and that remains a concern. Gross NPA had risen to 2.95% from 1.96% (QoQ) and Net NPA also increased sharply from 1.09% to 2.10%.  The bank aims to bring down Gross NPA to around 2% by Q4FY13. Like in Q1FY13, restructuring of assets continues. In Q1FY13, it had restructured assets to the tune of Rs.4770 crore and now in Q2, it is at Rs.1720 crore. The Bank states that total restructured assets for H1FY13 stands at Rs.12,000 crore and a few more accounts are yet to be restructured.  Its provision coverage ratio is at 60.80% compared to 73.57% n Q1FY13.

The bank is hopeful that the worst is over and will be able to expedite recoveries. It hopes to maintain NIM at 3% by end of Fy13, which in Q2Fy13 was at 2.98%, down from 3.17% in Q1Fy13. After all this NPA accretion, the net profit was down 54% (QoQ) at Rs.234 crore and CAR also dropped from 12.94% to 12.16%. For some time now, the stock will continue to be punished for the bad loans which have deteriorated its overall performance.