STRONG GROWTH IN NET PROFIT AIDED BY  SOARING NET INTEREST INCOME

Andhra Bank continued its stellar performance with another set of remarkable growth numbers for the quarter ended June 2010. Business grew at 25% y-o-y from Rs. 1,05,822 crores as at the end of June ’09 to Rs. 1,31,844 crores as at the end of June ‘10. Driven by very strong increase in Net Interest Income from Rs. 441.37 crores in June ’09 to Rs. 736.25 crores in June ’10 (Up 66.81%), net profit improved   to Rs. 320.41 crores from Rs 256.22 crores as at the end of June ‘09, (up 25.05%). Net Interest Margin moved up significantly from 2.85% to 3.72%.

Core Operating Profit (Excl. Profit on Sale of Investments) grew a remarkable 111% as Cost of Deposits plummeted to 5.49% as on 30.06.2010 from 6.77% as on 30.06.2009, whereas Yield on Advances dropped just 31 bps from 11.20% a year ago to 10.89%. Operating Profit continued its scorching pace of growth, growing by 46.67% from Rs. 348.00 crores in June ’09 to Rs. 510.40 crores in June ’10. Core Non-Interest Income was up by 46.77% from Rs. 109.39 crores in June ’09 to Rs. 160.55 crores in June ’10.

Capital Adequacy was at a robust 13.25% as against the regulatory minimum requirement of 9.00%. Gross NPAs stood at 1.01% with Net NPAs capped at 0.30%. Provision Coverage continues to be much above the regulatory stipulation of 70% and stood at 85.87%.

Return on Assets worked out to 1.47%, whereas Book value increased to Rs. 97.74 as on June ’10 from Rs. 80.48 a year ago. Return on Net worth also improved to 28.01% for June ‘10 versus 27.15% last year.

Bank is going ahead with the plans of Financial Inclusion of all 1144 villages above a population of 2000 allotted to us. These are to be fully covered by March 2012. This is being done under the Business Correspondent Model using Information Communication Technology (ICT).

Our joint venture banking subsidiary jointly with BOB and IOB in Malaysia has moved forward with clearances received from the regulator in Malaysia. The name is finalized as India International Bank (Malaysia) BHD.

Performance Highlights:

Profitability:

• Operating Profit of the Bank for Q1 of FY ’11 stood at Rs. 510.40 Crore as against Rs. 348.00 crore in Q1 of FY ’10, recording a growth of 46.67%.
• Net Profit of the Bank has gone up to Rs. 320.41 Crore as against Rs. 256.22 crore, an increase of 25.05%.
• Net Interest Income increased to Rs. 736.25 crore from Rs. 441.37 crore registering an increase of 66.81%.
• Net Interest Margin (NIM) moved up significantly to 3.72 % for the current quarter vis-à-vis 2.85%.
• Core Operating Profit excluding trading profit on Securities increased by 111% to Rs. 462.76 crore from Rs. 219.31 Crore.
• Core Non Interest Income of the Bank improved to Rs. 160.55 Crores from Rs. 109.39 crore registering an increase of 46.77%.
• Bank earned Fee Based Income of Rs. 16.95 crore for the quarter ended June 2010 compared to Rs. 15.59 crore for June 2009.

Business Growth:

• Total Business of the Bank rose to Rs. 1,31,844 crore, a growth of 24.59% from Rs. 1,05,822 crore in June 2009.
• Deposits of the Bank reached a level of Rs. 74,700 crore, a y-o-y growth of 22.64%, from Rs. 60,911 crore in June 2009.
• CASA Deposits of the Bank increased to Rs. 22,089 crore in June 2010 from Rs. 18,646 crore in June 2009, registering an increase of 18.47%. The share of CASA deposits stood at 29.57% as the end of June 2010.
• Advances of the Bank rose to Rs. 57,144 crore in June 2010, recording a y-o-y growth of 27.24% from 44,911 crore in June 2009.
• Priority Sector Advances improved to Rs. 19,203 crore as on 30.6.2010 from Rs. 15,594 crore as on 30.6.2009, reflecting a growth of 23.14%.
• Advances to Agriculture have gone up to Rs. 8,875 crore as on 30.6.2010, from 6,911 crore as on 30.6.2009, recording a growth of 28.41%.
• MSME Advances registered a significant growth of 46.60% and stood at Rs. 8,764 crore against Rs. 5,978 crore.
• Retail Credit significantly increased to Rs. 8,822 crore from Rs. 6,454 crore, with a growth of 36.69%.
• Corporate & Other Advances improved to Rs. 29,648 crore from Rs. 24,440 crore, registering a growth of 21.31%
• Credit Deposit Ratio, improved to 76.86% as on 30.6.10 compared to 74.04% as on 30.6.09.

Asset Quality & Recovery

• Gross NPAs to Gross Advances stood at 1.01% and in absolute terms  Rs. 579.26 Crore as on 30.06.2010.
• Net NPAs to Net Advances stood at 0.30 % and in absolute terms, the Net NPAs stood at Rs.169.77 crore as on 30.06.2010.
• Provision Coverage Ratio: The NPA Provision Coverage Ratio stood at 85.87% as on 30.6.2010, compared to regulatory stipulation of 70%.

Important Ratios

• Cost of Deposits has significantly come down to 5.49% as on 30.06.2010 from 6.77% as on 30.6.2009 (i.e., a decline of 128 basis points.
• Yield on Advances has marginally declined to 10.89% from 11.20% (31 basis points) during period under reference.
• Cost of Funds has significantly come down to 5.19% as on 30.06.2010, against  6.13% as on 30.06.2009.
• Yield on Funds has marginally declined to 8.58% from 8.68% during the period.
• Capital Adequacy Ratio as per Basel II is 13.25% as at the end of June 2010 well above the regulatory minimum level of 9% (Tier I Capital: 7.79 %; Tier II Capital: 5.46 %). Q1 profit is not taken into account for Tier – I Calculation, for the current quarter as per latest RBI guidelines.
• Return on Average Net Worth improved to 28.01% as at the end of June 2010 as against 27.15 % last year.
• Book value per share is higher at Rs. 97.74 as on June 2010 compared to Rs. 80.48 as on 30.6.2009.
• Return on Assets stood at 1.47% for the quarter ended June 2010.
• Cost to Income ratio has improved to 45.96% for the quarter ended June 2010 compared to 48.78% for the quarter ended June 2009.

Credit Segments

• Advances to the priority sector registered a growth of 23.14% reaching Rs.19203 crore.
• Agricultural advances moved up to Rs.8875 crore, recording a y-o-y growth of 28.41%.
• MSME (Micro, Small and Medium Enterprises) Credit recorded a significant growth of 46.60% to reach Rs.8764 crore as against a level of Rs.5978 crore as at the end of June 2009.
• Retail Lending portfolio registered a growth of 36.69% to reach Rs.8822 crore from Rs.6, 454 Crore in the previous year.
• Pursuing its commitment to the financial inclusion, the Bank has prepared and submitted to RBI “Financial Inclusion Plan” to provide Banking Service outlets in all the villages allotted to the Bank.

Delivery Channels

• As at the end of June 2010, Bank had 2531 delivery channels comprising 1560 branches, 47 extension counters, 886 ATMs and 38 Satellite offices.

Technology Initiatives:

• Internet Banking (Retail and Corporate) with transaction facility was launched for CBS Customers. As on 30th June 2010, 70,645 customers (69146 Retail and 1499 Corporate customers) have registered for Internet Banking facility.
• Customers can pay their taxes through Internet Banking in CBS. Fund Transfer facility is available for our Bank accounts and other Bank accounts through Internet Banking. Our bank’s Credit Card Bills also can be paid through Internet Banking facility.
• SMS Alerts facility has been provided to our customers for various types of transactions including ATM Drawals /POS transactions, Online Internet banking transactions. As on 30th June 2010, 12.67 Lakh customers got registered for this facility and on an average 50 Lakh SMS messages are being sent in a month.
• Option to register for the SMS Push Alert facility is provided on Bank’s ATMs also.
• SMS Pull facility has also been provided to our customers through which they can get account related information as and when they require by sending an SMS to Bank. The features include balance enquiry, mini-statement, cheque status, etc.,
• Bank has been approved as Self Certified Syndicate Bank (SCSB) by SEBI for the purpose of accepting ASBA (Application Supported by Blocked Amount) applications from investors of IPOs / FPOs.
• Online Trading facility has been provided to our customers through M/s Religare. Our customers can transact online through this facility.
• A facility of issuing Non-Personalized Debit Card with PIN immediately on opening an account across the counter has been introduced. More than ten lakh Non Personalized Cards were issued so far.
• Number of ATMs increased to 886 as on 30th June 2010 from 778 as on 30th June 2009. As a measure of Financial Inclusion Bank is operating four ATMs with Biometric facility out of which 3 are mobile ATMs. Besides the Bank owned ATMS, the ATM / Debit Cards issued by the Bank are accepted on NFS Network and VISA network (about 60,000 ATMs).
• Bank has installed a drive up ATM in Secunderabad, which is the first of its kind in the country by our Bank.
• Number of ATM / Debit cards stood at 51.54 Lakhs as on 30th June 2010.
• Bank started issuing Debit Cards with CVV so that they can be used for Online payments. A new security feature “Verified by VISA” was introduced as per RBI guidelines for transactions through Internet using Banks Credit and  Debit Cards.
• All the data of pensioners is centralized. 36,849 pensioners are served through 1003 branches.
• National Rural Employment Guarantee Scheme (henceforth referred as “NREGS”) is an initiative from Planning Commission,
• Government of India to guarantee a minimum of 100 days of employment in a year to people Below the Poverty Line (BPL). NREGS has been customized specifically to Secretariat branch, Hyderabad to process bulk transactions (NEFT/RTGS/INTERNAL). 7,226 transactions for total amount of Rs. 30.57 Crore took place till the end of June, 2010.