The Hindu Business Line : Andhra Bank targets Rs 45,000-cr business

BUOYED by the robust growth in credit offtake, Andhra Bank aims at achieving a business volume of Rs 45,000 crore during the current fiscal, representing a 25 per cent growth in business compared to the previous financial year.

As the yield from the treasury operations has tapered off, the bank plans to concentrate on its core banking activities so as to cushion the impact of the fall in yield from the treasury business, the bank's Chairman and Managing Director, Mr T.S. Narayanasami, has said.

Speaking to presspersons in Coimbatore, he said a stage has come for banks to `totally rely on core banking operations' and other income coming from fee-based activities to boost their performance.

He said during the current financial year, the credit offtake has been `strikingly significant' and has surpassed the level of accretion of resources and the excess liquidity in the system has come down considerably.

Banks have revised the interest rates on deposits in the past one or two months..

Though the spreads might have narrowed, increase in business volume would help augment the earning potential of the banks.

Mr Narayanasami is confident that this situation, along with the effective measures, would `set right the distortion' in the debt market..

Because of the pickup in lending, the banks would taper their investment portfolio, which he felt would be a prudent measure.

Mr Narayanasami, however, cautioned that the deployment of credit should be done judiciously to avoid fresh NPAs.

Andhra Bank has decided to enlarge its retail credit portfolio to 30 per cent of its net credit and a bulk of this would relate to retail trade and consumer loans.

He expected the bank to have a 17-18 per cent growth in credit offtake by the end of December. Asked about plans to tap the capital market, he said the bank has not firmed up its mind about it.

But the bank was not in `acute need' (of funds) because of the fairly comfortable capital adequacyposition.

In terms of financials, the bank is strong and is weighing options. It might take a view before June 2005 about coming out with an issue or not.

On mergers and acquisitions, Mr Narayanasami said the Finance Ministry has left the choice to the individual boards of the banks.

Replying to a question as to whether the interest rates — both for deposits and advances — would harden further, the Andhra Bank CMD said going by the latest trends, there is `no cause for concern' and it has more or less stabilised.