The profitability can be attributed to the 18 per cent reduction in interest expended at Rs 292.6 crore (Rs 358.5 crore in Q1 of FY 2003-04) and provisions for non-performing assets (NPAs) being 65 per cent less at Rs 30 crore (Rs 85 crore).
Interest earned was almost flat at Rs 560.5 crore (Rs 558.5 crore in Q1 of FY 2003-04) while other income was down a tad at Rs 194.8 crore (Rs 199.6 crore). Operating expenditure increased by 35 per cent to Rs 198.2 crore (Rs 146.5 crore).
Andhra Bank chairman and managing director, T Narayanasami, said the bank was able to improve its spread (net interest margin) to 4.36 per cent (3.55 per cent) on the back of substantial reduction in the cost of funds. The cost of funds stood at 4.41 per cent (5.85 per cent). While staying focussed on corporate and priority sector lending, we are seeking to step up credit to the retail/ wholesale traders and also explore opportunities for securitising rentals. As there is very little scope for healthy treasury gains, the bank will try and increase its fee-based income, he said.
In percentage terms the gross NPAs stood at 4.74 per cent (5.49 per cent) and the net NPAs stood at 0.85 per cent (1.72 per cent). The banks capital adequacy ratio stood at 15.16 per cent as of June-end 2004 as against 16.09 per cent as of June-end 2003.