Big loans at Andhra Bank take back seat as retail, MSME surge

Share of retail and MSME loans stood at 42% in Sept 2017, compared with 38% share of corporate advances

Even as Andhra Bank continues to battle growing NPAs in large accounts, its exposure to MSME and retail segments has surpassed corporate and mid-corporate advances for the first time in the second quarter ending September 2017.

The combined advances to MSME and retail sector reached Rs 63,357 crore while the corporate and mid-corporate segment accounted for Rs 57,417 crore loans out of the bank's gross credit of Rs 1,49,454 crore as on September 30, 2017.

In a clear contrast, corporate and mid=corporate advances stood at Rs 65,875 crore while the combined MSME-retail exposure was Rs 49,595 crore in the same period the previous year. These numbers gradually tilted in favour of small loans in the subsequent quarters till the proportion of big loans fell below that of the small loans, the bank's data shows.

Big loans fell 12.84 per cent while small loans-other than agriculture- grew by little over 27 per cent on a year-on-year basis.

The composition of total advances has undergone a clear shift away from big loans as is visible been visible in the latest data.

The share of retail and SME loans in total advances of Andhra Bank rose from 35 per cent in September 2016 to 42 per cent in September 2017 while the share of big loans has declined from 46.54 percent in September 2016 to 38.41 percent in the same period.

The bank's reluctance over fresh exposure to corporate and mid-corporate advances was a result of growing NPAs as 25.84 per cent of all the these advances became NPAs as at the end of September 2017, as compared with 18.09 percent in the same period the previous year.

Due to the steep rise in provisions for bad loans and the accounts referred to the insolvency tribunal (NCLT), the bank had to report a net loss of Rs 385 crore in the second quarter, which is the first quarter to register losses in recent years.

In contrast, the ratio of NPAs in retail credit stood at just 1.74 per cent followed by 4.49 per cent in agriculture and 10.18 per cent in MSME sector as on September 2017.

Besides the NPAs, the bank has restructured a total of Rs 6,355-crore loans, of which Rs 6,271 crore belongs to 38 accounts with a loan outstanding of Rs 25 crore and above, according to the bank.

Andhra Bank was able to register a 5.6 per cent credit growth during this quarter despite a negative growth in big corporate loans since consumer loans, and housing loans in the retail segment and micro and medium category loans in MSME segment grew in the range of 25 to 52 per cent during this period.