Andhra Bank plans QIP, follow on public offer; to raise Rs 200 crore from Government

HYDERABAD: State-owned mid-sized lender Andhra BankBSE -0.72 % is planning to raise funds through qualified institutional placement (QIP) or follow on public offer and is also looking at raising funds from the government through preferential allotment route.

The bank's board on Wednesday approved a proposal to this effect and has decided seek the shareholders' approval at an extraordinary general meeting to be held on December 19.

The board proposes to raise Rs 200 crore of funds from the government through preferential allotment route at an offer price to be determined under SEBI regulations. The board has decided November 19 as the relevant date to fix the offer price.

For the September quarter, the bank has suffered a fall of 78% in net profit at Rs 71 crore mainly owing to higher provisions. In the corresponding quarter of previous fiscal, the bank had reported a net profit of Rs 325 crore.

The total income for the September quarter, however, grew by 12% at Rs 3,817 crore, while total business rose by 18% at Rs 2.3 lakh crore. The bank saw its deposits growing by 19.1% at Rs 1.29 lakh crore and advances by 16.5% at Rs one lakh crore.

During the quarter under review, the bank incurred provisions towards contingencies and non-performing assets of Rs 702 crore as against Rs 260 crore a year ago. While gross NPAs went up to 5.15% from 3.48% a year ago, net NPAs grew to 3.54% from 2. .. net NPAs grew to 3.54% from 2.16%. For the September quarter, the bank reported gross NPAs of Rs 5,187 crore and net NPAs of Rs 3,477 crore. The bank reported a net interest margin of 3.16% for the quarter.

Vaibhav Agrawal, Vice President (Research-Banking) at Mumbai based brokerage Angel Broking, said, "Andhra Bank reported moderate operating performance, however asset quality pressures continued. NII growth was healthy during the quarter at 17.0% yoy (on back of robust advances growth of 15%). Non-interest income was largely flat in-line with our estimate.

Agrawal, however, said, "steep rise of 32% yoy in operating expenses, resulted in flat operating profit yoy at Rs 643 crore. On the asset quality front, pressures continued as gross and net NPA levels increased sequentially by 9% and 8%, respectively. Provisioning expenses nearly quadrupled yoy, thereby resulting in a PAT de-growth of 78% yoy."

On Wednesday, shares of Andhra Bank suffered a fall of 4.33% at Rs 59.60 on BSE the day the exchange's benchmark Sensex also suffered a fall of 0.43% at 20,194.40 points.

Source- Economic times

                     By 

Shah Mohammad Abdul Qadir

          PGDM 1st sem 

IIMT College Of Management

         Greater Aoida. UP