Andhra Bank net profit up by a fifth

Andhra Bank net profit up by a fifth

Hyderabad: State-owned Andhra Bank on Thursday posted a 21% increase in first-quarter net profit despite setting aside more money to cover bad loans and restructured accounts.

The lender’s profit increased to 386 crore in the three months ended 30 June from 320 crore a year earlier, it said. Interest and non-interest income combined rose 37.53% to 2,851 crore in the quarter.

Andhra Bank set aside 62 crore to cover bad loans. The bank has made provisions covering 82% of its bad loans.

Advances increased 32.5% year-on-year to 75,711 crore at the end of June. Deposits grew 22% to 90,901 crore.

Chairman and managing director S. Ramachandran attributed the profit growth to “better management of liabilities and deft handling of resources."

He said the bank’s board will meet to discuss a possible increase in interest rates, after the Reserve Bank of India raised its benchmark repurchase rate by 50 basis points to 8% on Tuesday, the 11th increase since the start of 2010. One basis point is one-hundredth of a percentage point.

“There will be an impact of 15 to 20 basis points in the July-September quarter on the net interest margin as we will not be able to effectively pass on the hike in interest rates to the borrowers," Ramachandran said. Net interest margin is the difference between what a bank charges for loans and pays for deposits.

Andhra Bank shares fell 50 paise, or 0.36%, to close at 136.90 on the Bombay Stock Exchange while the benchmark Sensex ended down 222.73 points, or 1.21%, to close at 18,209.52 points.