State-run Andhra Bank on Thursday reported a net profit of Rs 303 crore for quarter ended September, a 10.58 per cent increase compared to Rs 274 crore in the year-ago period. Revenues stood at Rs 1,941.1 crore, up 24.61 per cent from Rs 1,557.72 crore.
Net interest income increased 52 per cent to Rs 783 crore, as against Rs 515 crore in the year-ago period. This was mainly due to increased advances, which picked up when interest rates were low, Andhra Bank Chairman and Managing Director R Ramachandran said.
At 5.67 per cent, the cost of deposits came down significantly by 68 basis points (bps), as against 6.35 per cent last year. From 11.21 per cent last year, the yield on advances came down to 10.98 per cent, down 23 bps.
Cost of funds decreased to 5.25 per cent, as against 5.8 per cent in the year-ago period. However, the yield on funds increased to 8.8 per cent from 8.67 per cent last year, Ramachandran said.
Net interest margins (NIMs) rose to 3.91 per cent from 3.14 per cent in the year-ago period. “It will be difficult to sustain the NIM momentum. We will be happy if we can maintain it at 3.5 per cent,’’ he said, adding NIM was already under pressure due to rising deposit rates. “The deposit rates are likely to go up further,’’ he said.
The operating profit increased to Rs 565 crore, as against Rs 453 crore last year, up 24.72 per cent. Total business rose to Rs 139,604 crore, up 26.38 per cent from Rs 110,461 crore last year.
Deposits were up 26.18 per cent to Rs 78,584 crore, as against Rs 62,279 crore in the year-ago period. Advances stood at Rs 61,020 crore, up 26.64 per cent from Rs 48,182 crore.
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Net non-performing assets stood at 0.49 per cent, or Rs 299 crore, he said.
On Microfinance Institutions (MFIs)
The bank had an all-India exposure of Rs 300 crore to MFIs, the chairman said. “We see it as any other sector before lending. There is no need to panic and we still see loans extended to the sector as standard assets,’’ he said, adding no decision had been taken to stop advances to the sector.
He said there were no guidelines for the state-level bankers’ committee (SLBC) — of which Andhra Bank is the lead bank — for decreasing the fund flow to MFIs. “There is no mandate to look into the possibility of a debt swap,’’ he said.
Debt swap was also not on the agenda of the core committee formed in the wake of the crisis in the MFI sector. Five banks are part of the committee—Andhra Bank, State Bank of India, State Bank of Hyderabad, Indian Bank and Syndicate Bank.
No bank had given commitment to curtail loans to MFIs, he said, adding SLBC would look at ways to ensure the poor were not pushed into the debt trap as banks were still the main lenders to agriculture and self-help groups. “For banks, MFIs are an opportunity for safe lending,’’ he said.