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8/6/2019 A Tradition of Trust -Allahabad Bank - 3.0
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Critical Analysis By:Bhushan Pande, Harish Sharma,
Siddharth Purandare, Varun Parakh
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Agenda� Bank snapshot.� Financial and ratio analysis.� Quantitative analysis.� Qualitative analysis.� Investment ,borrowing and advances pattern.� Interbank analysis.� Bank¶s achievements� Recommendations.� Conclusion
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Individual Contributions
Name of the Student Individual Contribution in the Presentation
S iddharth PurandareIntroduction, Bank S nap shot, Issues and
Concerns & RecommendationsVarun Parakh Quantitative Analysis and Ratio Analysis.
Bhushan Pande Patterns and Qualitative Analysis
Harish Kumar S
harma
Inter Bank Analysis, Achievements, Highlights
& Conclusions
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B ank Snapshot� T he Oldest Joint S tock Bank of the Country, Allahabad Bank
was founded on April 24, 1865 by a group of Europeans in Allahabad.
� In year 1923, T he Head Office of the Bank shifted to Kolkataon Business considerations.
� In year 1969, Bank was Nationalized along with 13 other banks, ( Branches ± 151, Deposits - `119 Cr., Advances -
`82 Cr.)� In year 1989, United Industrial Bank Ltd. merged with
Allahabad Bank.
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B ank Snapshot«
� In year 1991, started a fully owned subsidiary - All BankFinance Ltd., for Merchant Banking.
� In year 2002, IPO of 10 Cr. equity shares (face value ` 10
each), followed by FPO in year 2005 of 10 Cr. equityshares, reducing Government shareholding to 55.23%.
� In year 2007, T he Bank opened its first overseas branch inHong Kong.
� Bank's business crossed `1,00,000 Cr., in year 2007.
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D omestic B ranch Network
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F inancial Snapshot:
� Total Business : ` 2,26,458 Cr
� Total Deposit : ̀ 1,31,887 Cr
� Credit : ` 94,571 Cr
� Investment : ` 43,545 Cr
� Operating Profit : ` 3,055 Cr
� Net Profit : ` 1,423 Cr
� Number of Branches : 2415
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F inancial Analysis of last 5 years
� Total Income of the Bank increased by 135% (For period06-11).
� Net profit has increased by 90% .
� Reserves have increased by 128%.
� Earnings per share has increased by 90% in therespective period.
� Capital adequacy ratio maintained at 13% which is abovethe requirement of BA S EL II norms of 8% and RBI Normsof 9%.
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R evenue & Profitability
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K ey R atios for FY 2010-11
� Credit to deposit ratio : 71.70� Capital adequacy ratio : 12.96� CAS A Ratio : 33.70
� Non-performing asset ratio
y Gross NPA : 1.74y Net NPA : 0.79
y Provision coverage ratio : 75.67y Return on assets ratio : 1.11
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R atio Analysis
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Investment Valuation Ratios
Earnings Per S hare 16.79 21.82 17.21 27.01 29.88
Book Value 100.22 117.47 111.45 131.73 160.5
Dividend Per S hare 3 3 2.5 5.5 6Profitability Ratios
Net Profit Margin 14.65 13.69 9.43 12.07 11.61
Return on Net Worth(%) 18.49 18.57 13.13 20.5 18.61
Management Efficiency RatiosCAS A Ratio 35.08 34.82 33.70
Total Income / Capital Employed(%) 8.33 9.45 9.03 9.18 9.04
Asset T urnover Ratio 3.61 4.78 5.14 5.92 6.82
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R atio Analysis «.
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Profit And Loss Account Ratios
Interest Expended / InterestEarned 64.15 71.64 70.69 68.33 63.48
Other Income / Total Income 0.14 0.48 0.49 2.29 2.8
Balance Sheet Ratios
Capital Adequacy Ratio 12.52 12.04 13.11 13.62 12.96Debt Coverage Ratios
Total Debt to Owners Fund 13.3 13.65 17.07 18.02 17.26
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Investment Patterns
S.No. Description of Investment pattern
Investment value in2011 (in ` Billion)
Investment value in2010 (in ` Billion)
1 Government S ecurities 351.035 (81 %) 309.8 (80.6 %)
2 Other Approved S ecurities 1.188 (0.3 %) 1.383 (0.36 %)
3 Debentures & Bonds 23.6331 (5.5 %) 16.24 (4.22 %)
4 Investments in S ubsidiaries
and / or Joint Ventures1.172 (0.27%) 1.172 (0.304%)
5 Others :Mutual Funds, U T I etc. 51.041 (12.0 %) 50.97 (13.26%)
6 S hares 4.40 (1.0 %) 4.69 (1.22%)
Total 432.47 (100%) 384.28 (100%)
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Analysis of Investment Pattern
� Maximum Investment in Govt. S ecurities, 81%, bank haveto meet S LR Requirements.
� Investment in Government S ecurities has increased by13.3% from previous year.
� Proportion of investment in risky assets like shares andmutual funds have been reduced.
� Investment in Debentures and bonds has increased by45.5 % in FY 2011.
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Advances Pattern FY 2010 -11� Cash Credit/Overdraft/Loans Payable on Demand(A) is 43%
� Term Loans(A) is 52.74%
� S ecured by tangible assets (B) is 93%
� Other Advances(CI) is 48%
� Priority S ector Advances(CI) is 33%
� Advances outside India (CII) : Due from Bank is 2%
� Advances outside India (CII) : Due from others is 0.99%
(As per S
chedule 9, it is sub divided into 3 Broad categories (A/B/CI&CII)
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B orrowing Patterns ² FY 2010-11
� Borrowings via S ubordinated Debt - T ier II Capital is37.75%
y Upper T ier II: 14.45 %
y Lower T ier II: 23.3 %
� Borrowings via S ubordinated Debt - Capital is 14.45%
� Borrowings outside India is 33.42% of total borrowing maybe because rate of interest on such borrowing is less andBank may have opted the route of External CommercialBorrowing under the RBI Norms.
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Qualitative Analysis
� Broad array of products & services introduced.
� Other achievements ± Impact on performance.
y 100% implementation of CB S
y T ie Up - Unique Identification Authority project
� Initiatives in Rural banking Rural S elf Employment T rainingInstitute
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Qualitative Analysis -Productivity Parameter
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Quantitative Analysis:
Sources of Income
AdvanceInterest
67%
InvestmentInterest
22%
NFNI7%
T radingportfolio
1%
Others3%
Advance
Interest65%
InvestmentInterest
19%
NFNI7%
T radingportfolio
6%
Others3%
Source of income FY 2009 10
Source of income FY 2010 11
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Peer Comparison- In depth Analysis.
� EP S is ` 31.85, is third highest in all the P S U Bank. Need
to generate more profit after tax to increase the EP S .
� NPM is 12.92 % ,second highest in P S U Bank, Need to
increase CA S A Ratio.
� Book value is ` 160.5; CMP is ` 195.
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Criteria: Interest Earned
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Criteria: Other Income
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Criteria: R eserves
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Criteria: Net Worth
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Criteria: D eposits
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Criteria: B orrowings
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Criteria: Advances
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Criteria: Investments
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Achievements for F inancial year 2010-11
� Bank achieved 100% Core Banking S olution
implementation.
� Ranked at 1 st S pot by Business today survey in the growth
of fee based income.
� Bank occupied 66 th Rank in fortune 500 list of India¶s
largest corporation.
� Bank launched first mobile banking van and coin vending
machine in Jharkhand.
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K ey Highlights� Bank tied up with UIDIA project (Unique Identification
Authority) for allotment of unique identification number to its customer.
� 1054 villages with population more than 2000 weregiven banking facility under the ³Financial InclusionPlan´.
�
No Frill accounts in villages covered under ³FinancialInclusion´ have crossed 2.51 lacs accounts.
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Issues and Concerns
� Lack of reach in S outhern and Western parts of India.
� Decrease in CA S A ratio.
� Increase in NPAs.
Suggestive measures� Aggressive expansion which also help bank Improve
in CA S A ratio.� Balanced portfolio management with sufficient
provisions and improvement in quality of assets.
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R ecommendations
� Large customer base to improve CA S A base.
� Increase low cost funds or deposits and reduce high costor wholesale deposits.
� Expanding overseas operations.
� Diverting the investments from Govt. S ecurities to highyielding portfolios.
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Conclusion
³Though Allahabad Bank is old at age, It has tremendousgrowth potential across India and overseas. Its growth will also result in the overall economic growth of India as well´
Har Kadam Aap Ke Saath..!!!