Allahabad Bank - 4QFY2013 Result Review - Angel Broking

Allahabad Bank reported weak operating performance for the quarter, primarily marred by asset quality pressures. While NII declined by 18.0% yoy (as NIMs dipped sharply qoq, largely due to interest reversals on slippages and also due to base rate cuts effected by the bank), non-interest income grew by strong 47.7% yoy (possibly due to higher treasury income and better recoveries from written-off accounts). Consequently, the bank reported operating profit decline of 14.8% yoy.

Higher provisioning (up by 37.0% yoy) following the steep deterioration in asset quality (gross and Net NPA levels higher by 45.5% and 66.6%, qoq respectively), resulted in earnings decline of 68.5% yoy. Sharp deterioration in asset quality was on account of higher slippages (at Rs. 2,500cr compared to around Rs. 1,000cr in last quarter), major portion of which were chunky in nature (9 accounts contributed around Rs. 1,600cr). The management has broadly guided for recovery/up-gradations of two of these nine accounts (around Rs. 500cr) in coming few quarters.

At CMP, the stock trades at 0.5x FY2015 ABV. Currently, the stock rating is under review.

Source : Equity Bulls

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