Buoyed by the rise in credit offtake in the first quarter ended June, Andhra Bank is eyeing 25-27% growth in the credit for the full year. Strengthened by the reduction in the cost of deposits, the bank sees net interest margin at about 3.5% for the full year.
For April-June, the bank recorded an operating profit of Rs 510 crore, up 47%, and net profit of Rs 320 crore, up 25%. Net interest income (NII) rose by 66.89% at Rs 736 crore, while net interest margin improved to 3.72% from 2.85% in the corresponding period of the previous year.
Total business too increased by 25% to Rs 1,31,844 crore. Deposits rose 22.64% to Rs 74,700 crore and advances increased 27.24% to Rs 57,144 crore during the quarter. The bank is encouraged by the drop in the cost of deposits in the first quarter and a relatively lower reduction in the yield on advances.
While cost of deposits fell to 5.49% as against 6.77% in the previous year, drop in the yield on advances was at 10.89% as against 11.2% in FY10.
“Retail, MSME and corporate lending are proving to be key contributors to the growth in net interest income and net interest margin. Retail credit rose by 36.69% while MSME advances increased by 46.6% in the first quarter. The corporate lending increased by 21.31%,” R S Reddy, CMD, said.
“We are above the industry level in all parameters now. The outlook for growth during this year appears good and we expect to do better in the next three quarters,” Reddy said.
However, the bank is not ruling out liquidity pressures, primarily due to certain measures that are expected to be brought into play by the banking regulators during the rest of the fiscal.
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