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Andhra Bank plans to raise up to Rs 1,000 crore via QIP in next five months

The lender is looking to close the QIP issue by December

Press Trust of India  |  New Delhi 

andhra, bank, andhra bank
Andhra Bank

State-owned lender is planning to raise Rs 800-1,000 crore through a qualified institutional placement (QIP) in the next five months to fund growth, a senior bank official said.

The lender is looking to close the issue by December, which would bring down the government's shareholding in the bank below the 60 per cent mark, the official, who did not wish to be identified, said.

The government's holding in stood at 61.26 per cent as on June 30, 2017.

The proposal is expected to be cleared by the board shortly, after which the process for would start, the official said adding, is a cost effective way of raising money rather than follow on public offer.

"We got Rs 1,100 crore from the government as capital in the last fiscal. After the fund infusion, the government's shareholding in the bank increased," the official told PTI.

Andhra Bank's capital adequacy ratio as per Basel-III norms stood at 12.38 per cent as on March 31. No plans to dilute stake in insurance JV

The bank has no plans to sell or dilute its stake in its life insurance joint venture, Co Ltd, the official said.

"We have no plans to sell stake in life insurance as we feel the valuation of the company will go up in the next 2 -3 years. Though we are not getting much dividend, but the company is making profit, so it's better to wait for some more time before taking a call," the official said.

Set up in 2009, is a joint venture between Bank of Baroda, Andhra Bank, and the UK-based financial and investment company, Legal & General.

has 30 per cent stake in the company, while and Legal & General have 44 per cent and 26 per cent stake, respectively.

For the fourth quarter ended March 31, 2017, Andhra Bank reported a 32 per cent decline in net profit at Rs 35.13 crore on account of rise in bad loans.

The bank had posted a net profit of Rs 51.60 crore in the corresponding quarter of preceding fiscal.

Gross non-performing assets (NPAs) as of March-end 2017 hit 12.25 per cent as a percentage of gross loans, from 8.39 per cent year ago. Net NPAs or bad loans were of the order of 7.57 per cent, up from 4.61 per cent.

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First Published: Wed, July 12 2017. 16:49 IST