By BS Reporter
Andhra Bank reported a marginal three per cent increase in net profit to Rs 325.63 crore for the second quarter compared with Rs 316.12 crore in the corresponding quarter last year under the impact of higher interest expenditure and slippages.
On a sequential basis, net profit declined 10 per cent against Rs 361.83 crore in the first quarter ending June.
While the total income grew 15.44 per cent to Rs 3,417.62 crore from Rs 2,960.32 crore in the year-ago period, expenditure rose 22.25 per cent to Rs 2,779.51 crore from Rs 2,273.53 crore, resulting in a 7.13 per cent decline in the operating profit to Rs 638 crore.
"This was a challenging quarter for the industry as well as for Andhra Bank as we witnessed less-than-expected growth in advances (15 per cent) and deposits (13.5 per cent). Net profit was also impacted because of the reversal of interest on account of non-performing assets (NPAs) as well as restructured loans. Higher cost of deposits and a 25-basis point cut in the base rate also contributed to the lower net interest income," B A Prabhakar, chairman and managing director, said here on Tuesday.
The bank witnessed Rs 1,000-crore slippages, all of them from a few large and mid-size corporate accounts, even as the overall provisioning towards NPAs declined 45 per cent to Rs 121.31 crore (from Rs 220.92 crore) as fresh NPAs attract lower provisioning rate of 15 per cent.
Of these slippages, Rs 579 crore came from just two accounts pertaining to two pharmaceutical companies, according to Prabhakar. Though the sector as such was doing well, these two companies had problems in raising equity for their expansion projects, he said.
Gross NPA levels during the quarter stood at 3.48 per cent (2.67 per cent last year). Net interest margin for the six-month period ending September 2012 was down to 3.13 per cent from 3.23 per cent in the corresponding period last year.