Allahabad Bank Pension and agri NPA hit profits BUY :: Emkay

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Allahabad Bank

Pension and agri NPA hit profits

BUY

CMP: Rs 198                                       Target Price: Rs 250     

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n     ALBK’s Q4FY11 net profit of Rs2.6bn lower than exp driven by Rs2.5bn on pension exp and higher NPA provisions. NII at Rs11.5bn (up 55% yoy) beats estimates

n     NII growth driven by 7.8% qoq growth in advances and 5bps qoq improvement in NIMs. Cost of dep up just 6bps qoq with CASA remaining stable despite strong growth

n     Slippages shoot upto Rs8.1bn (0.9% of adv) as the bank adds Rs5bn of agriculture NPAs. Strong recoveries keep gross NPAs stable but net NPAs at 8.7% of net worth

n     Valuations attractive at 1.1x FY12E/0.9x FY13E ABV. We maintain our BUY rating with price target of Rs250 (at 1.0x FY13E ABV). Remains our top pick in mid-sized PSU banks