Allahabad Bank (‘ALBK’) reported strong PAT growth of 224% yoy (on a low base) to Rs3.1bn in Q1FY10, well ahead
of our estimates. The outperformance was driven by stellar treasury gains and lower provisioning expenses.
Strong NII performance; steady margins: NII came in at Rs6.3bn, a growth of 27% yoy, ahead of our estimates of
Rs5.6bn, buoyed by strong growth in advances and steady margins. Margins remained stable at 3% sequentially as
the decline in funding costs offset the decline in yields. Cost of funds declined by 20bp qoq and 35bps yoy due to
sustained trimming of bulk deposits, down to ~3% of deposits from ~8% in Mar ’09. On the other hand, slower
growth in saving deposits led to a 144bp yoy and 90bp qoq decline in CASA ratio to 33.7% (reported at 34.1% of
aggregate deposits). (Exhibit 1 & 2)