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Analyst Meet / AGM - Analyst Meet

Targets loan growth of 10% for FY2018

Andhra Bank

09-Aug-2017, 02:11
Andhra Bank conducted an analyst meet on 08 August 2017 to discuss the financial results for the quarter ended June 2017. Suresh Patel, Managing Director and CEO of the bank addressed the call:

Highlights:

The bank has continued to maintain profitability, although moderate, even after seven quarters after AQR exercise from the RBI. The bank has posted 14% growth in NII and 56% surge in the other income, helping to record strong 37% growth in the operating profit in Q1FY2018.
The business of the bank increased 6% to Rs 3.15 lakh crore, driven by 6% growth in loan book. The bank has improved credit-deposit ratio 77.4% end June 2017 from 73.8% end March 2017.
The bank has recorded strong 24% growth in CASA deposits, while further improving CASA deposits ratio to 31.1% end June 2017 from 29.3% end March 2017. The bank expects to maintain CASA ratio at around 30%, while its in wait-and-watch mode with regard to decision on saving bank interest rate change.
The loan growth of the bank was driven by retail loans rising 19%, while agriculture at 12% and MSME loans at 23% also posted healthy loan growth end June 2017 over June 2016. The bank has improved the share of retail, agriculture and MSME (RAM) loans to 59% end June 2017 from 53% end June 2016.
Within the retail loan segment, the bank has recorded strong 26% growth in home loans and 30% in auto loans, while loan against property nearly trebled end June 2017 over June 2016. Bank has waived processing charges on housing loans and vehicle loans during the quarter to have an edge in the market competition.
The bank is targeting loan growth of 10% for FY2018. The bank expects RAM loan book to grow 20% and mid-corporate to expand 10% in FY2018.
The bank has posted healthy 10% growth in priority sector advances, while bank is consistently exceeding its priority sector loan targets. The bank has sold excess priority sector loans through Priority Sector Loans Certificates, while generating income of Rs 47 crore in Q1FY2018.
The bank has improved the net interest margins to 3.12% in Q1FY2018 from 2.9% in Q1FY2017. The bank has reduced Rs 9000 crore of bulk deposits during last one year, mainly helping to improve margins.
The fresh slippages of loans stood at Rs 2214 crore in Q1FY2018, of which Rs 850 crore came from restructured loan book. The bank expects fresh slippages to reduce gradually going forward.
The bank is sitting on provisions of Rs 11000 crore, while expects to write back these provisions after recoveries of bad debt starts.
The bank has exposure of Rs 3800 crore to 12 accounts identified by the RBI for speedy resolution under IBC. The bank holds 48% provision on these accounts, while its required to make additional provision of Rs 666 crore on these accounts in FY2018.
The bank has comfortable capital adequacy ratio position at 12% end June 2017. However, the bank is planning equity capital raising of Rs 1200 crore by December 2017 and Tier II bonds of Rs 1500 crore in Q4FY2018, which will help the capital requirement of the bank till end March 2019.
The bank has reduced the number of loss making branches from 650 end March 2017 to 290 end June 2017, while expects the loss making branches to dip to negligible level by March 2018.
The bank has substantially improved its profit from credit card business, while its targeting to improve its credit card base to 1 lakh by end March 2018 from existing 25 thousand credit card base.