Allahabad Bank to raise Rs1,200 crore via QIP
13 May 2019
State-run Allahabad Bank is looking to raise close to Rs1,200 crore through the qualified institutional placement (QIP) route this fiscal to comply with the Securities and Exchange Boad of India’s listing norms, its MD and CEO SS Mallikarjuna Rao, said on Friday.
Rao said the bank will have to raise capital of close to Rs4,500 crore by October 2020 to bring down the promoter holding to 75 per cent, from the present 92 per cent.
“We will have to raise around Rs4,500 crore to bring down government holding to 75 per cent by October 2020. We will do that in three or more tranches and look at various fund-raising options, including QIP for the same,” Rao told newspersons here on Friday.
The QIP is likely to bring down the government holding by 7-8 basis points by the end of this fiscal.
Allahabad Bank, which recently came out of the Prompt Corrective Action (PCA) framework of the Reserve Bank of India, hopes to turn profitable by the first quarter of this fiscal. The bank is hopeful of making an operating profit of close to Rs750-800 crore in the first quarter.
For the quarter ended 31 March 2019, the bank posted an operating profit of Rs634 crore, over five times the profit of Rs123 crore it recorded in the comparable quarter of the previous fiscal.
“We hope to be able to achieve an operating profit of Rs1,000-1,200 crore in each quarter by Q4 of this fiscal,” he said.
Allahabad Bank has already witnessed an improvement in business, with its net interest income growing by nearly 16 per cent on a year-on-year basis. Its net interest margin also improved to 2.58 per cent (2.20 per cent) as of March 2019.
“The cost of deposits has been coming down, and yield on advances has been increasing. We are already on a growth trajectory, and we hope to be profitable by the first quarter of this fiscal,” he said.
The bank’s losses, for the January-March 2019 quarter, however, widened to Rs3,834 crore on the back of higher provisioning for bad loans, compared to a net loss of Rs3,509 crore in the same period last year.
Total provisioning went up by nearly 10 per cent to Rs5,284 crore (Rs4,783 crore).
Net interest income grew by 41 per cent to Rs1,258 crore, against Rs889 crore in the same period last year. Net interest margin (NIM) improved to 2.36 per cent (1.62 per cent) during the quarter.
Gross non-performing assets (NPA) to advances increased to 17.55 per cent (15.96 per cent), while net NPA declined to 5.22 per cent (8.04 per cent).