Andhra Bank Q1 net up 89% at Rs 202 cr

The rise in net profit comes on the back of a marginal improvement in yield on advances

Andhra Bank has reported a net profit of Rs 202.52 crore for the quarter ended June 2015, an increase of 89.27 per cent over a net profit of Rs 107 crore in the corresponding quarter last year.

According to senior bank officials, the net profit rise comes on the back of a marginal improvement in yields on advances and a 40-basis point savings achieved in the cost of deposits, compared to the same in the corresponding previous quarter.

Total income during the quarter under review grew 7.7 per cent to Rs 4,529 crore, compared with Rs 4,295 crore in the year-ago period, while the expenditure increased by 3.5 per cent.

“We were able to achieve a higher profit by improving the yields and reducing the costs. However, we also had to take a hit from the dip in treasury income, as every other bank did this time around, in addition to a rise in agriculture NPAs (non-performing assets),” said Managing Director S K Kalra.

At the macro level, the first quarter has not been good, though it signifies the recovery even as the problems continue to persist in the economy, according to him.

On the deposits front, there was just a four per cent growth in this quarter, as the bank was claimed to have contained the bulk deposits, while the gross advances grew by 10.2 per cent. The net interest margin stood at 2.87 per cent, compared with 2.14 per cent in the year ago period.

The bank has increased the provision coverage ratio to 61.33 per cent, against the norm of 60 per cent, while it was at 48.19 per cent in the corresponding quarter last year.

On a sequential basis, there has been a slippage in some of the vital parameters in addition to a marginal 3.5 per cent decline in total income, compared with Rs 4,699 crore in the quarter ended March.  This was mainly due to higher recoveries achieved during the fourth quarter and on top of it, the bank had to make an interest reversal of over Rs 50 crore, as Rs 250 crore of agriculture loans turned NPAs during the quarter, said Kalra.

Among all the categories, micro, small and medium  enterprises advances had shown the highest growth of 20.9 per cent on account of similar improvement seen in the last quarter, while the mid and large corporate loans and retail credit saw a growth of 12 per cent and 13.7 per cent, respectively.

However, agriculture advances declined by 7 per cent owing to the problems arising out of the ongoing debt waiver programme.

The bank plans to raise Rs 3,000 crore during the current financial year through various means, including the qualified institutional placement, at an appropriate time.