financial statement #7 - 2010 - allahabad bank

8/2/2019 Financial Statement #7 - 2010 - Allahabad Bank

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A Case Study ofAllahabad Bank


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We are


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Trying to

understand

Balance Sheetof a Bank

BalanceSheet

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BALANCE SHEET OF ALLAHABAD BANK AS ON

(Rs. in crores)

31-Mar-06 31-Mar-07 31-Mar-08 31-Mar-09 31-Mar-10

Capital & Liabilities

Capital 446.70 446.70 446.70 446.70 446.70

Reserves & Surplus 3,191.83 4,030.13 4,774.35 5,405.25 6,306.25

Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48

Other Liabilities & Provisions 3,107.00 3,386.11 4,309.89 5,887.23 3,455.03

TOTAL 55,291.99 67,663.74 82,939.32 97,648.011,21,699.21

Assets

Cash & Balances with RBI 2,662.06 4,067.94 6,288.86 5,115.38 7,183.78

Balances with Banks & money at Call and

short notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87

Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.011,21,699.21

Contingent Liability 21,062.95 20,319.71 55,535.46 55,535.46 49,080.79

Bills for collection 1,396.62 1,515.47 1,410.84 1,410.84 2,944.37

We tried to understand the liabilities

side of a bank balance sheet in the

previous class


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FINANCIAL STATEMENT ANALYSIS A STUDY OF BANKS FINANCIAL STATEMENTS

Now, we shall be looking at the ASSETSside of the Balance Sheet

Assets Side


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(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets


Balances with Banks & money at Call and short

notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87

Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21



ReducingLiquidity


7/31FINANCIAL STATEMENT ANALYSIS A STUDY OF BANKS FINANCIAL STATEMENTS


(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87

Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21





Cash and Balances with ReserveBank Of India

It includes cash in hand including foreign currency notes

and the balance maintained with the Reserve Bank of India

as Cash Reserve Ratio which is at present is 6%. These are

the balances on which banks do not earn any interest.

ALLAHABAD BANK

(Rs. in crores)


Cash in Hand 220.93 284.07 320.35 359.807 379.8799

Balances with Reserve Bank of

India2,441.13 3,783.87 5,968.51 4,755.57 6,803.90

TOTAL 2,662.06 4,067.94 6,288.86 5,115.38 7,183.78




(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87

Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21





ALLAHABAD BANK

(Rs. in crores)


BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE

I. IN INDIA

(i) Balances with Banks

a) In Current Accounts 350.84 411.24 415.80 386.38 339.21

b) In other deposit Accounts 920.00 190.00 120.00 20.00 294.97

(ii) Money at Call and Short

Notice

a) With Banks 100.00

b) With Other Institutions

TOTAL 1,270.84 701.24 535.80 406.38 6

II. OUTSIDE INDIA

(i) Balances with Banks

a) In Current Accounts 100.15 59.30 174.97 475.90 429.82

b) In other deposit Accounts 356.92 61.44

(ii) Money at Call and ShortNotice

a) With Banks 52.04 42.46 639.10 920.45

b) With Other Institutions

TOTAL 457.07 172.79 217.44 1,115.00 1,3

Total (I+II) 1,727.91 874.03 753.24 1,521.38 1,98

These are the balances

on which banks earn

some interest income.




(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87

Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21





Investments

The banks are required to classify their entire investmentportfolio under three categories viz. Held to Maturity,Available for Sale and Held for Trading.

In the balance sheet, the investments will also be disclosedas per six classifications viz.:

i) Government securities

ii) other approved securitiesiii) Shares

iv) Debentures & Bonds

v) Subsidiaries/ joint ventures

vi) Others (CP, Mutual Fund Units, etc.).



Investments (continued)

Banks should decide the category of the investment at the

time of acquisition and the decision should be recorded

accordingly.

Note that SLR investments are the part of the Investments.

Any investment over and above SLR limit can be used tobanks obtain liquidity from the Reserve Bank under the

liquidity adjustment facility (LAF) against the collateral of

eligible securities.

Presently,SLR is 25%.



Held to Maturity

The securities acquired by the banks with the intention to hold them up tomaturity will be classified under Held to Maturity.

The investments included under Held to Maturity should not exceed 25 per

cent of the banks total investments.

Banks are allowed to exceed the limit of 25 percent of total investment under

HTM category provided:

(a) the excess comprises only of SLR securities, and

(b) the total SLR securities held in the HTM is not more than 25 percent of their DTL as on

the last Friday of the second preceding fortnight.



Held to Maturity(continued)

Investments classified under Held to Maturity categoryneed not be markedto market and will be carried at acquisition cost unless it is more than the face

value, in which case the premium should be amortized over the period

remaining to maturity.

Profit on sale of investments in this category should be first taken to the Profit

& Loss Account and thereafter be appropriated to the Capital Reserve

Account. Loss on sale will be recognized in the Profit & Loss Account.



Held for Trading

The Securities acquired by the banks with the intention to trade bytaking the advantage of the short-term price/interest rate movements

will be classified under Held for Trading.

These securities are to be sold within 90 days. If the bank is not able to

sell the security within 90 days due to exceptional circumstances such astight liquidity conditions, or extreme volatility, or market becomingunidirectional, the security should be shifted to the Available for Salecategory.

Profit or loss on the sale of investments under this category would betaken to Profit and Loss Account.

The individual scrips in the Held for Trading category will be marked tomarket at monthly or at more frequent intervals for each classificationof assets in this category.



Held for Trading(continued)

Based on the marked to market valuation for each

classification of assets under this categoryHeld for trading

If the figure results in net appreciation, the same is to be

ignored.

If the figure results in net depreciation, the same is to be

charged to Profit And Loss Account under the heading of

Provisions and Contingences.

However, the book value of the securities is not to be changed

after revaluation.



Available for Sale

The Securities which do not fall within the two categories Held to Maturity and Held for Trading will be classifiedunder Available for Sale.

Profit or loss on the sale of investments under this categorywould be taken to Profit and Loss Account.

The individual scrips in the Available for Sale category will be

marked to market at the quarterly intervals or at morefrequent intervals for each classification of assets in thiscategory.



Available for Sale(continued)

Based on the marked to market valuation for eachclassification of assets under this categoryAvailable forSale

If the figure results in net appreciation, the same is to beignored.

If the figure results in net depreciation, the same is to

be charged to Profit And Loss Account.

However, the book value of the securities is not to bechanged after revaluation.





(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87

Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21




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Advances

Advances are classified Performing Assets and Non-Performing Assets (NPA).

An asset becomes NPA when it ceased to generate income

for a bank. NPA is defined as a loan or an advance or acredit facility where interest and/or principal remainsoverdue for a period more than 90 days.

NPA are classified as

1. SUB-STANDARD ASSETS

2. DOUBTFUL ASSETS

3. LOSS ASSETS


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Advances (continued)

A SUB-STANDARD ASSET would be one which remain

NPA for a period less than or equal to 12 months.

A asset would be classified as DOUBTFUL ASSET if itremained in the SUB-STANDARD ASSETS category for 12

months.

A LOSS ASSET is one where the bank has identified the

loss and at whatever point of time, if a bank identifies

loss on a asset, at that point, it has to be recognized as a

Loss Asset.


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Income Recognition of NPA

Income from non-performing assets (NPA) is

not recognized on accrual basis but is booked as

income only when it is actually received.


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Provisioning Norms

SUB-STANDARD ASSETS - A general provision of 10percent on total outstanding should be made without

making any allowance for guarantee cover and securities

available. However, the unsecured exposures which are identified as

substandard would attract additional provision of 10 per cent, i.e.,

a total of 20 per cent on the outstanding balance.

But in case of infrastructure loan accounts which are classified assub-standard will attract a provisioning of 15 per cent instead of

the aforesaid prescription of 20 per cent.


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Provisioning Norms

DOUBTFUL ASSETS - 100 percent of the extent to which the advance is notcovered by the realizable value of the security to which the bank has a valid

recourse. In regard to the secured portion, provision may be made on the following

basis:

LOSS ASSETS - The entire asset should be written off.

Period for which the advance has

remained in doubtful category

Provision

requirement (%)

Up to one year 20

One to Three years 30

More than three years 100


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Provisioning Norms

STANDARD ASSETS

Provisions will be made as follows: (With Effect fromNovember 5, 2009)

Category of Standard AssetsProvision

requirement (%)

Direct Advances to Agricultural and SME Sectors 0.25

Advances to Commercial Real Estate (CRE) Sector 1.00

All other Loans and Advances 0.40


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Provisioning Norms

STANDARD ASSETS

Provisions will be made as follows: (With Effect fromNovember 15, 2008:

Category of Standard AssetsProvision

requirement (%)

Direct Advances to Agricultural and SME Sectors 0.25

All other Loans and Advances 0.40



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(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62

Advances 29,147.78 41,290.03 49,720.47 58,801.76 71,604.87Fixed Assets 742.72 1,056.33 1,071.47 1,109.75 1,118.27

Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21





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(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62


Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21





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(Rs. in crores)



Capital 446.70 446.70 446.70 446.70 446.70


Deposits 48,499.69 59,543.66 71,616.38 84,971.79 1,06,055.75

Borrowings 46.77 257.15 1,792.00 937.04 5,435.48


TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21

Assets



notice1,727.92 874.03 753.24 1,521.38 1,984.45

Investments 17,984.65 18,746.07 23,400.25 29,651.05 38,428.62


Other Assets 3,026.87 1,629.34 1,705.04 1,448.68 1,379.22

TOTAL 55,291.99 67,663.74 82,939.32 97,648.01 1,21,699.21




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This is in short what I could discuss with youabout the Balance Sheet of a Bank

I am confident that this

will be a step forward tomotivate you to go intofurther details of it andtrust that you will keep

it up.

financial statement #7 - 2010 - allahabad bank

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