Andhra Bank today said its net profit declined by 6.19% to Rs 362 crore for the quarter ended June 30 due to high deposit cost and provisioning for NPAs.
The city-based public sector bank had posted net profit of Rs 385.71 crore in the year-ago period.
The bank's total income during the first quarter rose to Rs 3,357.22 crore, up from Rs 2,851.18 crore over the same period last fiscal.
One of the reasons for declining profits is increase in the cost of deposits which the bank could not pass on to the borrowers, Andhra Bank Chairman and Managing Director B A Prabhakar told reporters, while announcing the quarterly earnings here.
On the contrary base rate was reduced by 25 basis points with effect from May 1, he added.
The non-performing assets (NPA) of the bank increased by almost 100% over June, 2011. That apart, interest income declined by almost Rs 30 crore and provision of NPAs went up by Rs 40 crore.
"With all these, banks ratios are still better than banks of comparable size or some of the bigger banks," Rao said.
The bank has made provisioning of Rs 157 crore towards NPAs during the quarter against Rs 117 crore during the same period last fiscal.
Net NPAs during the quarter registered at Rs 1,293 crore representing 1.52% against Rs 337 crore last year same period.
"The increase in NPAs is attributable to very few accounts. Two to three big accounts have slipped in to NPAs in this quarter," he said.
Replying to a query he said the Net Interest Margin may have some pressure of around 10 basis points in the current quarter and afterwards it will be adjusted.
NIM stood at 3.33% in the reported quarter.
Bank's credit grew by about 14 4% on a year-on- year basis in the first quarter while deposits grew by 18.5%.
The decline in the credit growth is also attributable to banks consciously reducing the corporate and short-term loans, the CMD said.
Andhra Bank, which has 1,761 branches as of now, plans to open 200 more branches and 200 ATMs in the current fiscal.
