Andhra Bank: Q4FY14 Result Analysis

Andhra Bank, a south based public sector lender posted a dismal set of numbers for the quarter and year ended 31 March, 2014. Net interest income (NII) of the bank remains muted for Q4FY14 at Rs 950 crore against Rs 953 crore in Q4FY13. However operating profit of the bank surprisingly went up by 19% to Rs 850 crore in the said period against Rs 714 crore in the same quarter of previous year on account of decrease in employee cost that went down by almost 52% to Rs 182 crore during Q4FY14 as compared to Rs 381 crore in the same period last year.

Net profit of the bank recorded massive decline of 74.4% on Y-o-Y basis in Q4FY14 and stood at Rs 88 crore against Rs 345 crore in the same quarter last year. This decline in net profit was mainly due to sharp increase in provision made by the bank. Total provision and contingencies of the bank rose by 95% Y-o-Y to Rs 712 crore in Q4FY14 against Rs 365 crore in Q4FY13. If we look at the provisioning pattern of the bank during the quarter, Rs 666 crore out of Rs 711 crore was for non-performing assets where it was Rs 333 crore in Q4FY13.

On the asset quality front, the bank showed marginal improvement during the fourth quarter. Gross non performing assets (NPAs) ratio of the bank marginally improved to 5.29% in Q4FY14 against 5.55% in Q3FY14. On the other hand, net NPA of the bank also showed improvement on account of higher provision and stood at 3.11% of net loan assets against 3.65% in Q3FY14. Moreover, provision and contingencies surged by 66% on quarterly basis to Rs 711 crore in the said quarter.

Coming to the financials of complete year, the bank's performance for the year is not satisfactory. NII of the bank went down by 2% to Rs 3697 crore in FY14 against Rs 3757 crore in FY13. However, the operating profit remained muted and stood at Rs 2760 crore in FY14 against Rs 2767 crore previous year.

At CMP of Rs 64.80 per share, the company is trading at 0.43x times of its book value.