Critical Analysis By: Bhushan Pande, Harish Sharma, Siddharth Purandare, Varun Parakh

Agenda
Bank snapshot. Financial and ratio analysis. Quantitative analysis. Qualitative analysis. Investment ,borrowing and advances pattern. Interbank analysis. Banks achievements Recommendations. Conclusion

Individual Contributions
Name of the Student Siddharth Purandare Varun Parakh Bhushan Pande Harish Kumar Sharma Individual Contribution in the Presentation Introduction, Bank Snap shot, Issues and Concerns & Recommendations Quantitative Analysis and Ratio Analysis. Patterns and Qualitative Analysis Inter Bank Analysis, Achievements, Highlights & Conclusions

Bank Snapshot

The Oldest Joint Stock Bank of the Country, Allahabad Bank was founded on April 24, 1865 by a group of Europeans in Allahabad. In year 1923, The Head Office of the Bank shifted to Kolkata on 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.

Bank Snapshot

In year 1991, started a fully owned subsidiary - All Bank Finance 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. equity shares, reducing Government shareholding to 55.23%. In year 2007, The Bank opened its first overseas branch in Hong Kong. Bank's business crossed `1,00,000 Cr., in year 2007.

Domestic Branch Network

Financial Snapshot:

Total Business Total Deposit Credit Investment Operating Profit Net Profit Number of Branches

: ` 2,26,458 Cr : ` 1,31,887 Cr : ` 94,571 Cr : ` 43,545 Cr : ` 3,055 Cr : ` 1,423 Cr : 2415

Financial Analysis of last 5 years

Total Income of the Bank increased by 135% (For period 06-11). Net profit has increased by 90% . Reserves have increased by 128%. Earnings per share has increased by 90% in the respective period. Capital adequacy ratio maintained at 13% which is above the requirement of BASEL II norms of 8% and RBI Norms of 9%.

Revenue & Profitability

Key Ratios for FY 2010-11

Credit to deposit ratio Capital adequacy ratio CASA Ratio

: 71.70 : 12.96 : 33.70

Non-performing asset ratio

y Gross NPA y Net NPA y Provision coverage ratio y Return on assets ratio

: : : :

1.74 0.79 75.67 1.11

Ratio Analysis
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Investment Valuation Ratios Earnings Per Share Book Value Dividend Per Share Profitability Ratios Net Profit Margin Return on Net Worth(%) Management Efficiency Ratios CASA Ratio Total Income / Capital Employed(%) Asset Turnover Ratio 8.33 3.61 9.45 4.78 35.08 9.03 5.14 34.82 9.18 5.92 33.70 9.04 6.82 14.65 18.49 13.69 18.57 9.43 13.13 12.07 20.5 11.61 18.61 16.79 100.22 3 21.82 117.47 3 17.21 111.45 2.5 27.01 131.73 5.5 29.88 160.5 6

Ratio Analysis .
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 Profit And Loss Account Ratios Interest Expended / Interest Earned Other Income / Total Income Balance Sheet Ratios Capital Adequacy Ratio Debt Coverage Ratios Total Debt to Owners Fund 13.3 13.65 17.07 18.02 17.26 12.52 12.04 13.11 13.62 12.96 64.15 0.14 71.64 0.48 70.69 0.49 68.33 2.29 63.48 2.8

Quantitative Analysis: Net Interest Margin

Investment Patterns
S.No. Description of Investment pattern
Government Securities Other Approved Securities Debentures & Bonds Investments in Subsidiaries and / or Joint Ventures Others : Mutual Funds, UTI etc. Shares Total

Investment value in Investment value in 2011 (in ` Billion) 2010 (in ` Billion)
351.035 1.188 23.6331 1.172 51.041 4.40 432.47 (81 %) 309.8 (80.6 %) (0.36 %) (4.22 %) (0.304%) (13.26%) (1.22%) (100%)

1 2 3 4 5 6

(0.3 %) 1.383 (5.5 %) 16.24

(0.27%) 1.172 (12.0 %) 50.97 (1.0 %) (100%) 4.69 384.28

Analysis of Investment Pattern

Maximum Investment in Govt. Securities, 81%, bank have to meet SLR Requirements. Investment in Government Securities has increased by 13.3% from previous year. Proportion of investment in risky assets like shares and mutual funds have been reduced. Investment in Debentures and bonds has increased by 45.5 % in FY 2011.

Advances Pattern FY 2010 -11

Cash Credit/Overdraft/Loans Payable on Demand(A) is 43% Term Loans(A) is 52.74% Secured by tangible assets (B) is 93% Other Advances(CI) is 48% Priority Sector 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 Schedule 9, it is sub divided into 3 Broad categories (A/B/CI&CII)

Borrowing Patterns FY 2010-11

Borrowings via Subordinated Debt - Tier II Capital is 37.75%

y Upper Tier II: 14.45 % y Lower Tier II: 23.3 %

Borrowings via Subordinated Debt - Capital is 14.45% Borrowings outside India is 33.42% of total borrowing may be because rate of interest on such borrowing is less and Bank may have opted the route of External Commercial Borrowing under the RBI Norms.

Qualitative Analysis

Broad array of products & services introduced. Other achievements Impact on performance.
y 100% implementation of CBS y Tie Up - Unique Identification Authority project

Initiatives in Rural banking Rural Self Employment Training

Institute

Qualitative Analysis -Productivity Parameter

Quantitative Analysis: Sources of Income

Trading portfolio 6% NFNI 7% Investment Interest 19% Others 3%

Advance Interest 65%

Trading portfolio 1% NFNI 7% Investment Interest 22%

Others 3%

Source of income FY 2009 10

Advance Interest 67%

Source of income FY 2010 11

Peer Comparison- In depth Analysis.

EPS is ` 31.85, is third highest in all the PSU Bank. Need to generate more profit after tax to increase the EPS.

NPM is 12.92 % ,second highest in PSU Bank, Need to increase CASA Ratio.

Book value is ` 160.5; CMP is ` 195.

Criteria: Interest Earned

Criteria: Other Income

Criteria: Reserves

Criteria: Net Worth

Criteria: Deposits

Criteria: Borrowings

Criteria: Advances

Criteria: Investments

Achievements for Financial year 2010-11

Bank

achieved

100%

Core

Banking

Solution

implementation.

Ranked at 1st Spot by Business today survey in the growth of fee based income.

Bank occupied 66th Rank in fortune 500 list of Indias largest corporation.

Bank launched first mobile banking van and coin vending machine in Jharkhand.

Key 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 were given banking facility under the Financial Inclusion Plan.

No Frill accounts in villages covered under Financial Inclusion have crossed 2.51 lacs accounts.

Issues and Concerns

Lack of reach in Southern and Western parts of India. Decrease in CASA ratio. Increase in NPAs.

Suggestive measures

Aggressive expansion which also help bank Improve in CASA ratio. Balanced portfolio management with sufficient provisions and improvement in quality of assets.

Recommendations

Large customer base to improve CASA base. Increase low cost funds or deposits and reduce high cost or wholesale deposits. Expanding overseas operations. Diverting the investments from Govt. Securities to high yielding portfolios.

Conclusion
Though Allahabad Bank is old at age, It has tremendous growth potential across India and overseas. Its growth will also result in the overall economic growth of India as well

Har Kadam Aap Ke Saath..!!!

Thank You..