Andhra Bank net doubles at Rs.144 crore in Q2

Plans to raise `500 crore via bonds, targets `900 cr net in FY-15

Hyderabad: Riding on the higher interest income, city-based Andhra Bank on Thursday posted Rs 144.49 crore net profit for the second quarter ended on September 30, 2014, an upswing of 104.5 per cent from Rs 70.65 crore the state-owned bank clocked in the same quarter last fiscal. Buoyed by the Q2 growth, the bank is targeting Rs 900 crore net profit for the current fiscal FY-15.

The bank’s total income for the quarter went up 15.9 per cent to Rs 4,423.6 crore as compared with Rs 3,817.5 crore a year ago. The interest income also rose by 15.4 per cent to Rs 4,146 crore from Rs 3,592 crore in the same quarter last fiscal.

“The substantial increase in core interest income has helped us to more than double the net profit. So, there was no windfall gain during the last quarter. It was better quarter for us despite the fact that real economic turnaround had not taken place,” C V R Rajendran, Chairman & Managing Director, Andhra Bank, told media here after announcing the financial results.

He further said there would be further improvement in the coming two quarters. “Our target is to make about Rs 900 crore net this fiscal. So far, we have not even reached Rs 300-crore in the first two quarters. However, reaching Rs 900 crore is a possibility given the improvement in agriculture loans,” he explained. Replying to a query on agriculture loan waiver schemes, he said as Telangana government had released 25 per cent of the farm loan amounts, banks had started renewing the loans. “The response has been overwhelming and farmers are coming forward to renew their loans by paying the remaining 75 per cent. TS government may repay the remaining amount over the next three years,” he said.

Stating that Andhra Pradesh government would be 20 per cent in the first year, he said the process had not yet begun there as the government wanted to weed out multiple loan accounts. “AP government has sought details of farm loans in a specific format. Banks has submitted over 91 per cent details till now,” he said.

On the capital infusion needed for the current fiscal, he said the bank would need around Rs 800 crore. “We have already requested the central government to provide the same,” he added. Alternatively, the bank are also planning to raise Rs 500 crore through Tier II bonds with Greenshoe option of another Rs 500 crore.

“We are waiting for further fall in interest rates so that we could raise the funds at attractive rates. So, we may come out with the bonds after next monetary policy review,” he said.

Rajendran said the bank might have to reschedule some loans in Visakhapatnam area hit by recent Hudhud cyclone. “We have a total exposure of Rs 5,000 crore and farm loans constitute a significant part. We may have to reschedule some of those loans,” he said.

During the second quarter, the bank’s total business rose by 13 per cent to Rs 2.60 lakh crore from Rs 2.30 lakh crore a year ago. The total deposits went up 12.2 per cent to Rs 1.45 lakh crore while the gross bank credit increased by 14.1 per cent to 1.14 lakh crore.