Public-sector lender Andhra Bank witnessed a decline of 8.5% in net profit at Rs 303 crore for the third quarter ended December 31, 2011, due to higher provisioning towards non-performing assets (NPAs).
The city-headquartered bank had posted a net profit of Rs 331 crore in the same period of previous fiscal.
The decline is mainly due to the provisions and contingencies made on account of restructuring of accounts and NPAs, Chairman and Managing Director BA Prabhakar said.
During the quarter, the lender's total income stood at Rs 3,158 crore, up 36% over the year-ago period.
"The provisions have mainly gone up because of the restructured accounts. Major sector for which we have made provisions is telecom... It is for the entire banking industry. Even other banks also made substantial provisioning for telecom tower accounts," Prabhakar said.
The bank has shown Rs 309.43 crore towards the total Provision and Contingencies, of which provision for NPAs is Rs 39.47 crore. Last year, in the same quarter, the provisioning was of Rs 172 crore.
Net NPAs for the quarter were recorded at 1.21% as against 0.47% over the same period last year.
There could be a decline of 15 to 20 basis points in the net interest margin (NIM) by March this year. NIM stood at 3.81% for the quarter and 3.80% for nine months.
"NIM will be under pressure. But we will be able to by and large manage."
On the interest rates of savings account, he said at present there were no plans to increase those interest rates.
"If you increase the interest rates, you will have to increase the lending rates. This is not the time to increase the lending rates for two reasons. One is the credit demand is not very strong. Number two is when the economy is going through so much of stress and slow down, increasing the interest rates will only affect the credit quality. We have to strike a balance and that’s what we are doing," he said.
Deposits at the end of the quarter stood at Rs 98,680 crore, registering growth of 20.2%, while advances recorded a growth of 20.7% at Rs 97,169 crore.
The bank has plans to recruit 2,270 employees, including 820 officers, in the next fiscal.
