Andhra Bank Q2 net more than doubles at Rs 144.5 crore

Andhra Bank has reported a 104.5% increase in net profit at Rs 144.49 crore in the quarter ended September, 2014 as the agriculture loan roll overs in Telangana and Andhra Pradesh saved the bank from fresh interest reversals and NPAs. The net profit of the bank in the corresponding quarter last year stood at Rs 70.65 crore.

The total income for the quarter under review gone up by 15.84% to Rs 4,423.62 crore from Rs 3174.73 crore in the corresponding previous quarter. The bank's total expenditure grew around the same 15% level as the bank was able to reduce the provisioning towards employee costs.

"As the agriculture loan roll-overs are taking place in both the states after the two government took concrete steps on loan waiver front we have not booked any fresh NPAs on agriculture front. Also an interest reversal of Rs 393 crore made earlier will get reversed in the third quarter. This would give a much better performance in the next quarter," Andhra Bank chairman and managing director C VR Rajendran said.

An earlier reversal of Rs 100 interest on this count returned to the books in the current quarter adding to the bottom-line, according to him. The bank's agriculture loan dues stood at Rs 3,700 crore and Rs 7,500 crore in Telangana and Andhra Pradesh respectively.

The bank has reduced the high cost deposits while meeting the funding requirements via selling of the securities ever since the yields have started falling. This effort also worked in achieving the improved performance in the second quarter, Rajendran said. Retail credit saw high growth during the quarter registering an year on year increase of 18.6%.

Responding to a question Rajendran said they will strive to achieve the full year target of of Rs 900 crore net profit even though the first half accounted for only Rs 300 crore in bottom-line as they hope to reduce the NPAs in the coming months. The bank has recovered Rs 2,000 crore NPAs so far in this year.

To issue bonds in December and January

Rajendran said they would hit the market for raising the tier 2 capital amounting to Rs 1,000 crore through issue of bonds in December and January. The timing was important as the the possibility of rate cuts was expected to push the bond yields further down to about 10% from the present 10.40%, resulting in a substantial saving for the bank, according to him.

Though the bank had requested Government of India to infuse Rs 800 crore fresh capital there would not be much of a requirement for tier 1 capital if the bond issue goes as planned, he said.