Andhra Bank's net profit increased 20.63 per cent at Rs 386 crore in the first quarter ended June 30, 2011, compared to Rs 320 crore in the year-ago period.

The increase in net profit was driven by 23.64 per cent growth in net interest income (NII) at Rs 910 cr.

“Besides growth in NII, better liability management and control over costs also resulted in profit,” Mr R. Ramachandran, Chairman and Managing Director (CMD), told newspersons here on Thursday.

The net interest margin (NIM) increased to 3.77 per cent (3.72 per cent). Business increased 26 per cent at over Rs 1.66 lakh crore.

Earnings-per-share stood at Rs 6.89 (Rs 6.61).

NPAs RISE

Gross non-performing assets (NPAs) went up to 1.55 per cent from 1.01 while net NPAs were at 0.45 per cent (0.30 per cent).

“The NPAs have gone up because of their increase in some sectors, including retail, micro-, mini- and small enterprises and agriculture,” Mr Ramachandran said.

The bank had also gone for higher provisioning in accordance with the norms of the Reserve Bank of India.

OUTLOOK

Andhra Bank may witness some pressure on NIM in the future. “There could be some pressure on NIM with a likely impact of 15 to 20 basis points,” the CMD said.

Higher cost of funds could be one of the reasons behind likely pressure on NIM for a quarter or two, he added.

Cost of funds rose to 6.37 per cent in the quarter under review from 5.19 in the year-ago period. Cost of deposits, too, surged to 7.02 per cent (5.49 per cent).

Credit growth for the full year would be in line with the expectations of the regulator at about 18-20 per cent, he added.

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