Marred by increased provisions for restructured loans in the telecom sector, Andhra Bank on

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Thursday reported 8.38 per cent drop in net profit for the December quarter compared with the year-ago period. “Provisions had gone up because of restructured accounts, especially in the telecom sector. Had the provisioning not been there, our total income would have gone up by Rs 400 crore. Loans were also restructured in the textile and construction sectors. However, we do not have any exposure to 2G in telecom,” said B A Prabhakar, chairman and managing director of Andhra bank.

Net profit of the bank for the quarter stood at Rs 303.17 crore compared with Rs 330.91 crore. Total business for the quarter stood at Rs 3158.26 crore, up 36.12 per cent compared with Rs 2320.20 crore in the year-ago period. While gross NPAs stood at Rs 1,884.13 crore, net NPAs rose to Rs 943.27 crore for the quarter. Provisions and contingencies stood at Rs 309.43 crore. Out of this, the provisioning for net NPAs was Rs 39.47 crore. Net interest margin of the bank stood at 3.81 per cent. “Net interest margin is down four basis points year-on-year and by 10 basis points quarter-on-quarter. We expect the pressure to continue in this financial year and it may come down by 15 to 20 basis points. However, we may be able to manage it,” he said.

Asked whether the bank was planning to raise interest rates of savings accounts, the chairman said: “If we increase interest rates, lending rates should also be increased. But then credit demand has not been strong enough and the economy is also going through stress and slowdown. So, we cannot increase lending rates, but we will strike a balance.”