Allahabad Bank (NS:ALBK) is a nationalized bank headquartered in Kolkata. It is the oldest Joint Stock Bank (A public sector Unit whose shares are held by investors and not the Government) in India. On the 24th of April 2014, Allahabad Bank completed 150 years of establishment after it was founded in the year 1865.
As of 31 March 2012, Allahabad Bank had established 2,500 branches across India. The Bank’s total business stood at INR 3.1 trillion for FY 2012-13. The bank has a branch in Hong Kong and a representative office in Shenzen.
Financial Analysis:
Bank has incurred a loss of 564.96 crore during the quarter ended 30th June,2016 against profit of 146.86 crore in the quarter ended 30th June,2015.
Total Income although has decreased YoY as per Q1FY17 by 5.06%. It has reduced from Rs. 539644 crores to Rs. 512291 crores. Although if we compare QoQ, the figures have risen by 1.4%.
Operating expense has increased 18.7% YoY as per Q1 FY17 and by 2.4% QoQ, which may be indicative of decreasing operational efficiency in the business.
Provisions have risen QoQ by 55.68% as per Q1FY17 which is not that a positive indicator, showing there may be increasing contingencies or claims in near future.
Profit before tax figures have improved QoQ reducing from a loss of Rs. 161,390 crores to in Q4 FY16 to Rs. 36,334 crores in Q1 FY17.
Net interest income fell 12.2 percent to Rs 1,393 crores, from Rs 1,587.1 crores on a year-on-year basis.
The contingent liabilities has risen considerably from FY15 at Rs 102,296.79 crores to Rs. 149,672.72 crores in FY16.
Ratio Analysis:
The bank’s gross NPA for the April-June quarter of the current fiscal increased to 12.33%, as compared to 5.29% in the same quarter of the previous year.
The EPS has fallen from 11.39 in FY2015 to a -12.68 in FY2016.
The interest income per employee has fallen from Rs 8,136,732.57 crores in FY15 to Rs. 7,824,064.92 crores in FY16.
The interest income per branch has also reduced from Rs. 63,436,668.92 crores in FY15 to 58,831,605.92 crores in FY16.
The price to book value as well as price to sales ratio has decreased from FY15 to FY16.
The cost to income ratio has increased from 34.78% in FY15 to 41.12% in FY16 representing that either costs have risen or the income has reduced or both.
Allahabad Bank has performed on the downside the previous 3 quarters as the profits have turned negative over this term. There were few positive aspects too for the bank as QoQ figures have improved. CASA share to aggregate deposits increased to 36.28% as on 31st Mar’16 from 33.75% in the preceding fiscal year. Total CASA outstanding during FY16 stood at 72,041 crore, thus clocking a Y-o-Y growth of 10.98%. Increase in the CASA ratio indicates improving Net interest margin. Total deposits of the Bank went up by 3.73% to 200,644 crore as on 31st Mar’16 from 193,424 crore year ago. Gross credit of the Bank increased to `157,707 crore from 153,095 crore last year. On a Y-o-Y basis, it increased by 3.01%.
The bank has also taken new initiatives via new tie ups like that with travel aggregator goibibo and tie up with EzeeWill for online will preparation.
Investment Opinion
Allahabad Bank share price is currently trading at Rs. 76.55. Looking at the fundamentals of the company we suggest to book profit in the share as it has already gained by 60% in the past two months. If in the near future the NPA can be negated by growth in deposits or interest income then it would be a good buy at the support level of 50, with a target of 80.
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