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AB posts 3-fold jump in net
Despite reeling under the burden of higher non-performing assets (NPAs), Public sector Andhra Bank (AB) reported over three-fold jump in net profit at Rs 202 crore for the third quarter ended on December 31, 2014, as against Rs 46 crore in the same period a year ago.
Low cost of funds, higher yields on advances helped the bank clock Rs 202 crore net in Q3
Hyderabad: Despite reeling under the burden of higher non-performing assets (NPAs), Public sector Andhra Bank (AB) reported over three-fold jump in net profit at Rs 202 crore for the third quarter ended on December 31, 2014, as against Rs 46 crore in the same period a year ago.
The bank’s total income went up by 16.4 per cent to Rs 4,540 crore during the period from Rs 3,901 crore a year ago. The interest income saw 15.3 per cent upswing to Rs 4,150 crore from Rs 3,598 crore.
“The cost of funds for us has come down drastically while the yield on advances went up. The two factors have helped the bank to post robust growth in the net profit during the third quarter,” CVR Rajendran, Chairman and Managing Director, Andhra Bank, told media after announcing third quarter financial results here.
During the quarter, the cost of funds or deposits stood at 7.66 per cent which was significantly lower than that of 7.84 per cent in the December 2013 quarter. Additionally, the yield on advances went up to 11.66 per cent from 11.15 per cent a year ago.
The CMD said the bank had gone for alternative liability sources instead of bank deposits to reduce the cost of funds. “We focused on cheaper sources of funds such as infrastructure bonds because bank deposits come at relatively higher interest cost,” he explained. In the Q3, the bank’s total business went up 11.3 per cent to Rs 2,60,841 crore from Rs 2,34,344 crore a year ago. Of it, deposits accounted for Rs 1,42,078 crore, an increase of 7.9 per cent from Rs 1,31,700 crore. The total advances, at Rs 1,18,763 crore, increased by 15.7 per cent from Rs 1,02,644 crore. However, the NPAs continued to be a worry for the bank with gross NPAs standing Rs 7,118 crore during Q3, representing 5.99 per cent of the total advances. The net NPAs, at Rs 4,264 crore, are also reasonably higher, constituting 3.7 per cent of net advances.
Rajendran said bank has been making concerted efforts to recover the NPAs. “Apart from the regular staff, over 18,000 employees are now focusing on recovery of bad loans. So, we will see improvement on this front,” he said, adding that spurt in NPAs from agriculture sector also led to increase in total NPAs.
Replying to a query, the CMD said the bank would raise Rs 500 crore capital in the fourth quarter and another Rs 1,000 crore to 1,500 crore during the first two quarters of next fiscal.
