Poor September Quarter For Andhra Bank

Andhra Bank reported a disappointing set of numbers for Q2FY2014. The bank’s net profits declined by 78.30% YoY to Rs 70.65 crore, which was lower than the estimates. This was due to higher provisions and operating expenses. The net profit stood at Rs 325.63 crore in the corresponding quarter last year.

The total income for the September quarter grew by 11.74% at Rs 3817.57 crore against 3416.55 crore in the corresponding quarter last year. The Net Interest Income (NII) grew 16.97% to Rs 1,045.38 crore in the three-month period ended September 2013 from Rs 893.75 crore a year ago. The provisioning and contingencies made during the quarter stood at Rs 502.19 crore, up 260.04% from Rs 139.48 crore in the year-ago period.

Andhra Bank’s asset quality also deteriorated, with the net non-performing assets for the quarter at Rs 3477.35 crore as against Rs 1830.59 crore for Q2FY13, a staggering increase of 89.96%. It reported a YoY jump of 72.12% in the Gross NPAs, which came in at Rs 5187.2 crore against Rs 3013.79 crore in Q2FY13. On a QoQ basis, the Gross NPAs rose by 9.24%. The ratio of net non-performing assets to net advances stood at 3.54% as on September 30, 2013, higher than that of 3.27% as on June 30, 2013 and 2.16% on September 30, 2012.

The bank is also looking at raising funds to tune of Rs 200 crore from the government through the preferential allotment route. We believe that its operating performance and asset quality are likely to weaken further.