Allahabad Bank posts Rs.3.7 bn net profit

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Kolkata, Jan 19 (IANS) The city-based Allahabad Bank has posted net profit of Rs.3.69 billion for the quarter ended Dec 31, 2008 as against a profit of Rs.3.65 billion in the corresponding quarter last fiscal, a top company official said here Monday.

In the third quarter, Allahabad Bank’s net interest margin (NIM) was also up at 3.24 percent, compared with 2.59 percent in the year-ago period. (NIM is a measurement of the difference between the interest income generated and the amount of interest paid out to their lenders).

The bank, however, expects this would fall in the last quarter.

‘Our margins were up because of a consistent strategy followed during the third quarter, which resulted in shedding Rs.6,000 crore (Rs.60 billion) worth of high-cost deposits, and re-pricing some low yielding advances,’ K.R. Kamath, chairman and managing director of the bank said at a press conference.

But at the same time, he said he did not expect to sustain this in the current quarter. ‘It’s difficult to shed any more high-cost deposits. We expects NIM to come down to 3 percent in the current quarter,’ Kamath said.

During October-December, costs of deposits increased marginally to 6.69 percent against 6.55 percent in the year-ago period, while the cost of borrowings went up to 8.94 percent against 7.19 percent.

Talking about deposit and advance growth, Kamath said: ‘We expect advances to grow by about 22 percent in 2008-09. Our deposits have so far shown an increase of 16 percent against a projected 17 percent growth rate.’

The bank’s net non-performing asset ratio stood at 0.82 percent as on Dec 31, 2008, compared to 0.67 percent as on Dec 31, 2007.

Kamath said the bank is not looking at raising capital, adding: ‘There is no need to dilute stake. As for raising of debt, we may look at raising some funds in February-end provided the interest rate scenario is favourable.’