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IL&FS, farm loan waiver strain Allahabad Bank balance sheet

The bank reported Rs 2,524 crore of fresh bad loan in the December quarter.

, ET Bureau|
Updated: Feb 06, 2019, 09.24 PM IST
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Total income was nearly flat at Rs 4,756.88 crore for December quarter of 2018-19.
Kolkata: Fresh slippages on account of IL&FS defaults as well as farm loan waiver by state governments strained Allahabad Bank's balance sheet even as the state-owned lender cut quarterly loss to Rs 733 crore in the December quarter against Rs 1264 crore in the year ago period.

The bank has reported Rs 2524 crore of fresh bad loan in the December quarter, of which Rs 300 crore was on account of IL&FS with another Rs 386 crore coming from other corporate accounts. Farm loan waiver contributed 30% to the fresh generation of bad loans, Managing Director SS Mallikarjuna Rao said.

The lender's gross non performing assets ratio slipped to 17.8% from 17.53% a quarter back. It was 14.4% as on December 2018.

Operating profit dipped 17% at Rs 769 crore, while it has written back provision of Rs 348 crore on account mark to market gains in December quarter when bond yields softened.

The bank provided Rs 1495 crore which was 38% lower than Rs 1414 crore made in the year back.

The Kolkata-based lender has set a target of getting out of the prompt corrective action framework by June. Rao said most of the critical parameters under PCA should be within the permissible limit by that time.

Its recovery target of Rs 3500 crore in the fourth quarter is rather aggressive, compared with Rs 1100 crore recovery during the quarter under review. The target includes the possible recovery of Rs 1400 crore from resolution of bad loans under National Company Law Tribunal.

The MD said the NPA ratio may even improve to 6% by March from 7.7% as on December if the resolution of some of the bigger corporate accounts such as Bhushan Power happens this quarter.

The lender announced the financial numbers at the market hours. Share price rose 0.58% to Rs 43 on BSE at the end of Wednesday's trade.

It received Rs 4844 crore capital from the government this fiscal so far while it is likely to get another dose of capital in the next two months.

"We have made a commitment that we will not rely on government next fiscal and will tap market to raise capital instead," Rao said.
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