A Tradition of Trust -Allahabad Bank - 3.0

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Critical Analysis By:Bhushan Pande, Harish Sharma,

Siddharth Purandare, Varun Parakh



Agenda� Bank snapshot.� Financial and ratio analysis.� Quantitative analysis.� Qualitative analysis.� Investment ,borrowing and advances pattern.� Interbank analysis.� Bank¶s achievements� Recommendations.� Conclusion



Individual Contributions

Name of the Student Individual Contribution in the Presentation

S iddharth PurandareIntroduction, Bank S nap shot, Issues and

Concerns & RecommendationsVarun Parakh Quantitative Analysis and Ratio Analysis.

Bhushan Pande Patterns and Qualitative Analysis

Harish Kumar S

harma

Inter Bank Analysis, Achievements, Highlights

& Conclusions



B ank Snapshot� T he Oldest Joint S tock Bank of the Country, Allahabad Bank

was founded on April 24, 1865 by a group of Europeans in Allahabad.

� In year 1923, T he Head Office of the Bank shifted to Kolkataon Business considerations.

� In year 1969, Bank was Nationalized along with 13 other banks, ( Branches ± 151, Deposits - `119 Cr., Advances -

`82 Cr.)� In year 1989, United Industrial Bank Ltd. merged with

Allahabad Bank.



B ank Snapshot«

� In year 1991, started a fully owned subsidiary - All BankFinance Ltd., for Merchant Banking.

� In year 2002, IPO of 10 Cr. equity shares (face value ` 10

each), followed by FPO in year 2005 of 10 Cr. equityshares, reducing Government shareholding to 55.23%.

� In year 2007, T he Bank opened its first overseas branch inHong Kong.

� Bank's business crossed `1,00,000 Cr., in year 2007.



D omestic B ranch Network



F inancial Snapshot:

� Total Business : ` 2,26,458 Cr

� Total Deposit : ̀ 1,31,887 Cr

� Credit : ` 94,571 Cr

� Investment : ` 43,545 Cr

� Operating Profit : ` 3,055 Cr

� Net Profit : ` 1,423 Cr

� Number of Branches : 2415



F inancial Analysis of last 5 years

� Total Income of the Bank increased by 135% (For period06-11).

� Net profit has increased by 90% .

� Reserves have increased by 128%.

� Earnings per share has increased by 90% in therespective period.

� Capital adequacy ratio maintained at 13% which is abovethe requirement of BA S EL II norms of 8% and RBI Normsof 9%.



R evenue & Profitability



K ey R atios for FY 2010-11

� Credit to deposit ratio : 71.70� Capital adequacy ratio : 12.96� CAS A Ratio : 33.70

� Non-performing asset ratio

y Gross NPA : 1.74y Net NPA : 0.79

y Provision coverage ratio : 75.67y Return on assets ratio : 1.11



R atio Analysis

Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

Investment Valuation Ratios

Earnings Per S hare 16.79 21.82 17.21 27.01 29.88

Book Value 100.22 117.47 111.45 131.73 160.5

Dividend Per S hare 3 3 2.5 5.5 6Profitability Ratios

Net Profit Margin 14.65 13.69 9.43 12.07 11.61

Return on Net Worth(%) 18.49 18.57 13.13 20.5 18.61

Management Efficiency RatiosCAS A Ratio 35.08 34.82 33.70

Total Income / Capital Employed(%) 8.33 9.45 9.03 9.18 9.04

Asset T urnover Ratio 3.61 4.78 5.14 5.92 6.82



R atio Analysis «.

Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

Profit And Loss Account Ratios

Interest Expended / InterestEarned 64.15 71.64 70.69 68.33 63.48

Other Income / Total Income 0.14 0.48 0.49 2.29 2.8

Balance Sheet Ratios

Capital Adequacy Ratio 12.52 12.04 13.11 13.62 12.96Debt Coverage Ratios

Total Debt to Owners Fund 13.3 13.65 17.07 18.02 17.26



Investment Patterns

S.No. Description of Investment pattern

Investment value in2011 (in ` Billion)

Investment value in2010 (in ` Billion)

1 Government S ecurities 351.035 (81 %) 309.8 (80.6 %)

2 Other Approved S ecurities 1.188 (0.3 %) 1.383 (0.36 %)

3 Debentures & Bonds 23.6331 (5.5 %) 16.24 (4.22 %)

4 Investments in S ubsidiaries

and / or Joint Ventures1.172 (0.27%) 1.172 (0.304%)

5 Others :Mutual Funds, U T I etc. 51.041 (12.0 %) 50.97 (13.26%)

6 S hares 4.40 (1.0 %) 4.69 (1.22%)

Total 432.47 (100%) 384.28 (100%)



Analysis of Investment Pattern

� Maximum Investment in Govt. S ecurities, 81%, bank haveto meet S LR Requirements.

� Investment in Government S ecurities has increased by13.3% from previous year.

� Proportion of investment in risky assets like shares andmutual funds have been reduced.

� Investment in Debentures and bonds has increased by45.5 % in FY 2011.



Advances Pattern FY 2010 -11� Cash Credit/Overdraft/Loans Payable on Demand(A) is 43%

� Term Loans(A) is 52.74%

� S ecured by tangible assets (B) is 93%

� Other Advances(CI) is 48%

� Priority S ector Advances(CI) is 33%

� Advances outside India (CII) : Due from Bank is 2%

� Advances outside India (CII) : Due from others is 0.99%

(As per S

chedule 9, it is sub divided into 3 Broad categories (A/B/CI&CII)



B orrowing Patterns ² FY 2010-11

� Borrowings via S ubordinated Debt - T ier II Capital is37.75%

y Upper T ier II: 14.45 %

y Lower T ier II: 23.3 %

� Borrowings via S ubordinated Debt - Capital is 14.45%

� Borrowings outside India is 33.42% of total borrowing maybe because rate of interest on such borrowing is less andBank may have opted the route of External CommercialBorrowing under the RBI Norms.



Qualitative Analysis

� Broad array of products & services introduced.

� Other achievements ± Impact on performance.

y 100% implementation of CB S

y T ie Up - Unique Identification Authority project

� Initiatives in Rural banking Rural S elf Employment T rainingInstitute



Qualitative Analysis -Productivity Parameter



Quantitative Analysis:

Sources of Income

AdvanceInterest

67%

InvestmentInterest

22%

NFNI7%

T radingportfolio

1%

Others3%

Advance

Interest65%

InvestmentInterest

19%

NFNI7%

T radingportfolio

6%

Others3%

Source of income FY 2009 10

Source of income FY 2010 11



Peer Comparison- In depth Analysis.

� EP S is ` 31.85, is third highest in all the P S U Bank. Need

to generate more profit after tax to increase the EP S .

� NPM is 12.92 % ,second highest in P S U Bank, Need to

increase CA S A Ratio.

� Book value is ` 160.5; CMP is ` 195.



Criteria: Interest Earned



Criteria: Other Income



Criteria: R eserves



Criteria: Net Worth



Criteria: D eposits



Criteria: B orrowings



Criteria: Advances



Criteria: Investments



Achievements for F inancial year 2010-11

� Bank achieved 100% Core Banking S olution

implementation.

� Ranked at 1 st S pot by Business today survey in the growth

of fee based income.

� Bank occupied 66 th Rank in fortune 500 list of India¶s

largest corporation.

� Bank launched first mobile banking van and coin vending

machine in Jharkhand.



K ey Highlights� Bank tied up with UIDIA project (Unique Identification

Authority) for allotment of unique identification number to its customer.

� 1054 villages with population more than 2000 weregiven banking facility under the ³Financial InclusionPlan´.

�

No Frill accounts in villages covered under ³FinancialInclusion´ have crossed 2.51 lacs accounts.



Issues and Concerns

� Lack of reach in S outhern and Western parts of India.

� Decrease in CA S A ratio.

� Increase in NPAs.

Suggestive measures� Aggressive expansion which also help bank Improve

in CA S A ratio.� Balanced portfolio management with sufficient

provisions and improvement in quality of assets.



R ecommendations

� Large customer base to improve CA S A base.

� Increase low cost funds or deposits and reduce high costor wholesale deposits.

� Expanding overseas operations.

� Diverting the investments from Govt. S ecurities to highyielding portfolios.



Conclusion

³Though Allahabad Bank is old at age, It has tremendousgrowth potential across India and overseas. Its growth will also result in the overall economic growth of India as well´

Har Kadam Aap Ke Saath..!!!



Thank You..

A Tradition of Trust -Allahabad Bank - 3.0

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