Andhra Bank Q2 net profit rises 74% to Rs251 crore

Hyderabad: Public sector lender Andhra Bank on Saturday reported a 74% increase in net profit for the quarter ended September on the back of lower deposit costs. Net profit rose to ₹ 251 crore in the quarter from ₹ 144 crore in the year-ago period.

Total income rose 7.25% year-on-year to ₹ 4,744 crore.

“The growth was fuelled by the growth in CASA (current account saving account) and drop in cost of deposits,” managing director and chief executive officer Suresh Patel said.

The CASA deposits of the bank grew 27.2% to ₹ 45,042 crore.

The net interest margin (NIM) of the bank, the difference between interest earned and interest paid, for the quarter was 3.20%. “ We would expect the growth in advances to be 14-15%, and the NIM at 3% for the rest of the year. Most of the growth would be by expanding branches,” Patel said.

Advances for the September quarter rose 13.9% over the year-ago quarter. Retail advances grew 21% to ₹ 20,898 crore, medium small and micro enterprises advances 31% to ₹ 24,424 crore, and priority sector advances rose 24% to ₹ 52,232 crore.

The bank indicated that the take off in agricultural credit was not satisfactory as there was a drought-like situation and the demand was low.

Provisioning for bad loans rose to ₹ 624 crore in the quarter compared with ₹ 399.68 crore in the year-ago period. “Despite the higher provisioning for non-performing assets (NPAs), there was a jump in net profit, which is a healthy sign for the bank,” Patel said.

Gross NPAs also increased to ₹ 7,470 crore compared with ₹ 6,884.25 crore in the year-ago period. Net NPAs stood at ₹ 3,759 crore.

“With a growth in advances, there would be reduction in NPAs as well,” Patel said. “The bank would try and restrict the NPA percentage so that the balance is maintained to tap growth.”