Andhra Bank’s net profit declined 36 per cent to Rs 231 crore in the first quarter ended June 30 from Rs 362 crore in the year-ago period on higher provisioning.
“This has been one of the most difficult quarters. Virtually, there was no increase in corporate credit, it actually came down. Due to continued slowdown, the manufacturing sector did not do well,” B. A. Prabhakar, Chairman and Managing Director, Andhra Bank, told newspersons here on Wednesday.
The net non-performing assets increased from 1.52 per cent to 3.27 per cent. Higher provisions and a Rs 96-crore interest reversal affected the bank’s performance during the quarter.
Though the cost of funds was brought down by 18 basis points (bps), the net interest margin came down to 2.7 per cent (3.04 per cent).
The bank’s income rose to Rs 3,854 crore (Rs 3,357 crore) mainly due to growth intreasury income.
WAY FORWARD
To improve asset quality, Andhra Bank will launch a recovery drive and has also lined up Rs 3,000 crore credit (including Rs 2,000 crore for discoms) during the current quarter.
“We expect credit growth to be 13-14 per cent for the full year, while the NIM could be at 2.70 per cent levels,” Prabhakar said.
The Andhra Bank scrip fell 6.16 per cent on the Bombay Stock Exchange on Wednesday to close at Rs 64.70.
On the impact of the State’s bifurcation to create Telangana, he said it may take a year or two for fresh investments to take off.