Banking On Progress - Andhra Bank

What has been the growth in deposits and advances of Andhra Bank in 2007-’08?
During the financial year 2007-’08, Andhra Bank has shown a decent growth in deposits and advances.  Total deposits of our bank stood at Rs.49437 crore as on 31 March, 2008 as against Rs. 41454 crore as on March 31, 2007, which is a growth of 19.26 per cent. Gross bank credit has grown from Rs, 28233 crore as on 31.3.2007 to Rs.34556 crore, which is a growth of 22.39 per cent year on year.  Total business stood at Rs.83,993 crore during FY 2007-’08, a growth of 20.53 per cent.

How much of Andhra Bank’s credit disbursal have been for large, medium and small enterprises?
As on the last fortnight of the half year ended September, 2008, credit to small enterprises stood at Rs. 2997 crore, credit to medium enterprises stood at Rs.1494 crore and credit to large industries stood at Rs. 8696 crore. This constituted 8.55 per cent, 4.26 per cent and 24.81 per cent respectively of the total credit. Credit to SME stood at Rs. 4491 crore during the period, constituting 12.81 per cent of gross bank credit.

Has the rise in interest rates impacted credit growth?
The rise in interest rate has not impacted the credit growth across all the sectors. However, it has impacted to a certain extent to industries where there is not much demand for their products. Though there was a rise in interest rates during the beginning of the current financial year, there was reasonable demand for credit. During April-September, 2008, our advances have risen by 5.44 per cent, despite a 125 bps hike in BMPLR during the period. However, after the series of liquidity injection measures of RBI, we have reduced BMPLR by 75 bps.

Which are Andhra Bank’s top five sectors in terms of credit disbursals?
The top five industries where our bank has significant exposure are 'infrastructure', 'basic metals and metal products', 'textiles', 'food processing' and 'construction'.

What would be your strategy of growth for taking Andhra Bank into the big league? Do you plan to grow inorganically too? If yes, have you identified any takeover targets? Have you launched any innovative products in 2008?[PAGE BREAK]

The immediate goal of our bank is to achieve a total business turnover of more than Rs.1 lakh crore by the end of March, 2009, which would be the launch pad for more aggressive growth. Going forward, we plan to achieve a 20-25 per cent growth in business year-on-year. We are also expanding our branch network throughout the country, apart from exploring the possibility of opening more offices abroad.

We have launched innovative products such as AB Privilege Savings Bank Scheme, AB Privilege Current Deposit Scheme, SMS Alerts, E-Payment of taxes, internet banking etc during the current financial year. We propose to sell gold coins starting from December’08 onwards. More innovative products are in the pipeline.

We have completely introduced core banking solution in 500 of our branches in real time and hope to achieve 100 per cent by March, 2009. More tech-savy products can be launched once CBS process is completed. It is too early to talk about inorganic growth at this point of time but a call can be taken when the time comes.

Post-2009, how do you see the banking scenario unfolding? Do you see consolidation happening in PSU banks also?
The global banking crisis has exposed the weakness of the banking system in the developed countries and the harm caused by lack of regulation. Post 2009, I do not see the possibility of any major presence by new foreign players in our domestic banking space, as was being expected earlier. PSBs are set to continue their dominance in the foreseeable future. Mergers between PSU banks will happen only if there is excellent synergy between the entities and not for the sake of a merger. However, in this aspect, it is better to have a wait and watch approach.

What is the capital adequacy ratio (CAR)?
We are very comfortable with our capital adequacy ratio. We have been consistently maintaining a CAR of more than 11 per cent. Our CAR as on March, 2008, June 2008 and September, 2008 stood at 11.61 per cent, 12.13 per cent and 13.43 per cent respectively, much above the regulatory minimum of 9 per cent. As on September, 2008, our Tier 1 CAR was 8.86 per cent and Tier-II CAR stood at 4.57 per cent. We hope to maintain the trend by the end of the current financial year.