NEW DELHI: Allocating provisions to cover for its worsening bad loan problem pushed Allahabad Bank into posting a Rs 1,944 crore net loss for the first quarter of FY19. The public sector lender had recorded a net profit of Rs 28.84 crore a year ago. The bank’s shares plummeted on the stock exchanges after the results were disclosed, falling 6.32 per cent on the BSE to close the day at Rs 40 per share.
While there were a number of factors that eroded during the quarter, including higher wage employee costs and reduced total income, the primary factor was the near doubling of provisions for bad loans. As per the bank’s financial statement for the quarter, total income fell to Rs 4,794.04 crore from Rs 4,968.57 crore YoY, and employee cost rose from Rs 447.49 crore to Rs 626.8 crore.
But, provisions for bad loans shot up from Rs 1,686.7 crore to Rs 2,590.37 crore during the quarter, pushing the Gross NPA ratio to 15.97 per cent of the gross advances as against 13.85 per cent as on June 30, 2017. Net NPA improved to 7.32 per cent (Rs 10,410.30 crore) as against 8.96 per cent (Rs 12,868.66 crore).
As per RBI directions of June last year regarding nine accounts going in for the insolvency process, the bank said it made fresh provisions of Rs 532.42 crore during the quarter under review. There was also additional provisioning of Rs 657.54 crore made under regulatory directions made on August 2017, also in respect of accounts under the IBC.