Allahabad Bank posts huge Q2 loss on higher NPA provisions

State-owned Allahabad Bank on Tuesday reported a net loss of Rs.1,822.71 crore in the September quarter of 2018-19 financial year, on higher provisioning for bad loans. The bank had posted a net profit of Rs.70.20 crore in the July-September quarter of 2017-18.

However, as compared to the June quarter this fiscal, the bank narrowed the losses from Rs.1,944.37 crore.

Total income also fell to Rs.4,410.72 crore during the quarter as against Rs.5,067.78 crore in the same period of 2017-18, Allahabad Bank said in a BSE filing.

Gross non-performing assets (NPAs) jumped to 17.53 per cent of the gross advances as on September 30, 2018 as against 14.10 per cent by the same period a year ago.

Net NPAs or bad loans fell to 7.96 per cent of the net loans as against 8.84 per cent in the year-ago period.

In absolute value, gross bad loans stood at Rs.27,236.19 crore by the end of September quarter 2018-19, as against Rs.21,454.27 crore in the year-ago period. Net NPAs were Rs.11,082.74 crore as against Rs.12,662.18 crore.

Due to rise in bad loans, provisioning for NPAs were raised to Rs.1,991.88 crore for the reported quarter from Rs.1,469.52 crore in the same period of 2017-18.

The overall provisioning and contingencies rose to Rs.2,356.04 crore for the quarter as against Rs.1,497.11 crore in the year-ago period.

Non-performing loan provision coverage ratio of the bank is 67.81 per cent, it said.

Citing RBI circular permitting banks to continue the exposures to MSME borrowers to be classified as standard assets, Allahabad Bank said it has retained advances of Rs.576.43 crore as standard asset as on September 30, 2018.

“In accordance with the provisions of the circular, the bank has not recognised interest income of Rs.18.84 crore and is maintaining a standard asset provision of Rs.27.88 crore as on September 30, 2018 in respect of such borrowers,” it said.

The bank also informed that it has spread the provision for fraud/red flagged accounts of Rs. 802.70 crore in 27 accounts as on September 30, 2018.

Further, a provision of Rs.161.30 crore (cumulative Rs.390.58 crore up to September 30, 2018) has been reversed out of Rs.390.58 crore, Allahabad Bank said.