Allahabad Bank - 58.00 Rs
Incorporated in 1865, Allahabad Bank (AB) - one of the oldest public sector bank in India is today the sixth largest bank with 2154 branches consisting of 983 rural, 405 semi-urban, 452 urban and 314 metropolitan branches. Besides it has 98 extension counters, one overseas branch at Hong Kong and one representative office at Shenzhen, China. Nationalized in 1969, AB is presently led by Mr. A C Mahajan. Apart from carrying out the general banking and treasury operations, AB offers housing loan, education loan, depository services, life insurance, bankassurance, mutual Fund, wealth management services etc. It has launched reverse mortgage scheme for senior citizens and offers online education loan sanction facility for nearly 250 educational institutes. It is already having tie up with NICL & LIC in the respective fields of non-life insurance and life insurance business respectively. To bump up its fee based income, bank has multiple tie ups with county's leading AMGs namely UTI, Principal PNB, Kotak Mahindra, Franklin Templeton & Reliance Mutual Fund for promoting their wide range of products. It has tied-up with Wall Street Finance, the primary agent of Western Union Money Transfer, for inward remittances from various foreign countries. AB also has a subsidiary called AllBank Finance which has obtained Category-I Merchant Banking and Underwriting registration from SEBI and is engaged in corporate advisory services, project appraisal, issue management, loan syndication and underwriting. Although AB has major presence in central & eastern India but it is looking to expand in western and northern region. It opened 94 branches in FY08 and has authorization for opening more 117 new branches in the current fiscal.
Notably AB has achieved 100% computerization of all its branches, extension counters, currency chests & offices. But on the other hand, only 209 branches and Mumbai zonal office has been covered under Core or Centralized Banking Solution representing nearly 50% of bank's business. However bank aims to take the total count of branches with core banking facility to 900 by March 2009. In line with technological developments, bank also provides internet banking, mobile banking, SMS banking and e-Payment facilities. Its 157 branches are participating in RBI sponsored RTGS transactions whereas NEFT has been made live in 147 branches. At the same time it has enabled 183 branches for Electronic Accounting in Excise and Service Tax and 167 branches for direct tax - OLTAS system. Currently AB has installed only 211 ATMs but has joined National Financial Switch project of sharing ATM network across 28 member banks thereby facilitating customers to use more than 18500 ATMs across the country at a very low cost. It is having principal membership of VISA for issue of ATM-cum-Debit card and has issued nearly 3 lakh card to its customers. Interestingly the bank is in the process of implementation of cheque truncation system in 61 branches under National Capital Region (New Delhi).
Financially AB has been doing excellent and has ended FY08 on quite a buoyant note. Its deposits as well advances, each grew by 20% to Rs 71,616 cr & Rs 50,312 cr respectively. The net interest margin fell marginally to 2.78% against 2.97% last year but its total income increased by 35% to Rs 7,136 cr. Remarkably, banks fee based income increased by 22% to Rs 438 cr. The business per employee increased from 4.95 cr in FY07 to Rs 6.04 cr in FY08, an increase of 22%. Notably, bank has reduced its gross NPA to 2% from 2.61% and net NPA to 0.80% from 1.07%. Astonishingly, bank’s agriculture NPA is only about 3% of overall NPA for FY08. Its reserves and surplus currently stands at 4800 cr leading a healthy book value of Rs 117. On the other hand, the capital adequacy ratio is 12.04% as per BASEL II and 12.23% as per BASEL I. To boost this bank is planning to come out with right issue in next 2 years. Well for FY08, bank recorded a Net profit of Rs 975 cr, after providing for higher provisions, contingencies and tax to the tune of Rs 505 cr. Thus it posted an EPS of Rs 22 on current equity share capital of Rs 447 cr and declared 35% dividend which gives a whopping yield of 6% at CMP. For future AB has projected a business level of Rs 2 lakh cr by FY10 against 1.21 lakh in FY08. The bank plans to open its overseas branches in the upcoming economies of the globe like Kenya, Tanzania, New Zealand, Australia, China etc apart from Bangladesh. For FY09 it is estimated to report total income of Rs 7750 cr and PAT of Rs 1000 cr i.e. EPS of Rs 22 on current equity. Despite hardening of interest rate, debt waiver scheme and govt steps to control liquidity are causes of concern still investors can buy at current levels for a price target of Rs 90 in 15 months.
Notably AB has achieved 100% computerization of all its branches, extension counters, currency chests & offices. But on the other hand, only 209 branches and Mumbai zonal office has been covered under Core or Centralized Banking Solution representing nearly 50% of bank's business. However bank aims to take the total count of branches with core banking facility to 900 by March 2009. In line with technological developments, bank also provides internet banking, mobile banking, SMS banking and e-Payment facilities. Its 157 branches are participating in RBI sponsored RTGS transactions whereas NEFT has been made live in 147 branches. At the same time it has enabled 183 branches for Electronic Accounting in Excise and Service Tax and 167 branches for direct tax - OLTAS system. Currently AB has installed only 211 ATMs but has joined National Financial Switch project of sharing ATM network across 28 member banks thereby facilitating customers to use more than 18500 ATMs across the country at a very low cost. It is having principal membership of VISA for issue of ATM-cum-Debit card and has issued nearly 3 lakh card to its customers. Interestingly the bank is in the process of implementation of cheque truncation system in 61 branches under National Capital Region (New Delhi).
Financially AB has been doing excellent and has ended FY08 on quite a buoyant note. Its deposits as well advances, each grew by 20% to Rs 71,616 cr & Rs 50,312 cr respectively. The net interest margin fell marginally to 2.78% against 2.97% last year but its total income increased by 35% to Rs 7,136 cr. Remarkably, banks fee based income increased by 22% to Rs 438 cr. The business per employee increased from 4.95 cr in FY07 to Rs 6.04 cr in FY08, an increase of 22%. Notably, bank has reduced its gross NPA to 2% from 2.61% and net NPA to 0.80% from 1.07%. Astonishingly, bank’s agriculture NPA is only about 3% of overall NPA for FY08. Its reserves and surplus currently stands at 4800 cr leading a healthy book value of Rs 117. On the other hand, the capital adequacy ratio is 12.04% as per BASEL II and 12.23% as per BASEL I. To boost this bank is planning to come out with right issue in next 2 years. Well for FY08, bank recorded a Net profit of Rs 975 cr, after providing for higher provisions, contingencies and tax to the tune of Rs 505 cr. Thus it posted an EPS of Rs 22 on current equity share capital of Rs 447 cr and declared 35% dividend which gives a whopping yield of 6% at CMP. For future AB has projected a business level of Rs 2 lakh cr by FY10 against 1.21 lakh in FY08. The bank plans to open its overseas branches in the upcoming economies of the globe like Kenya, Tanzania, New Zealand, Australia, China etc apart from Bangladesh. For FY09 it is estimated to report total income of Rs 7750 cr and PAT of Rs 1000 cr i.e. EPS of Rs 22 on current equity. Despite hardening of interest rate, debt waiver scheme and govt steps to control liquidity are causes of concern still investors can buy at current levels for a price target of Rs 90 in 15 months.
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