Andhra Bank, registered in Nov 20, 1923 is one of the oldest public sector banks of India. As of 31 March 2011 with the total business of Rs1636 billion and total number of 1657 branches Andhra Bank offers almost all basic banking services with some extra and attractive benefits to the customers. Bank also has partnered with various designated private financial institutions for assisting them in sales of their Mutual Fund products. Andhra Bank is the first bank in India to have launched mobile biometric ATMs which enables even the illiterate or uneducated customers of the bank to enjoy the ATM facility being offered by the bank.
FINANCIALS: The interest income of Andhra Bank has been grown at CAGR of 29.5% during FY05-FY11, the growth has also been maintained in Net Interest Income (NII) and Profit after Tax, both grew by 26% and 19.5% respectively during the same period. In FY11 the Interest Income grew 30% to Rs 8291 crore, NII 47% to Rs 3221 crore and PAT 21% to Rs 1267 crore. The NIM for the same period marginally up by 59bps to 3.21% while PAT margin declined by 113bps. In Q4FY11 the interest income and PAT both surged by 38% and 30% respectively from Q4FY10 while owing to interest margin pressure NII slightly down by 4.4% for the same period.
Industry Outline
The key growth driver of banking industry, credit growth has shown a decent growth in the past years. The credit portfolio is further expected to grow at CAGR of 16% from Rs 34.9 lakh crore in 2010 to Rs 164.1 lakh crore by 2020. The Govt is also trying to expand the banking sector to the rural sector of India, currently there are around 6 lakhs un-banked villages and only 38% of all bank branches are in rural areas. Although efforts have been made to expand the branch network from 8,700 at the time of nationalisation in 1969 to 87,000 now, only 32,000 branches are present in rural India. Banks are also experimenting with various incentives for furthering financial inclusion but have not been able to make a significant impact, given the magnitude of the problem and difficulties in reaching the excluded population but still there is lot of scope for banks to do so many things to expand their business especially in rural market. Currently banking sector in India also well capitalized with both core capital adequacy and leverage ratios at comfortable level. However right now in the near term on account of tight monetary policy the banks are facing margin pressure due to numerous rate hikes and the trend may continue for another one more quarter, Actually RBI is trying to control the inflation which is hovering above the comfort level, in the last 15 months RBI has increase the key policy rates 10 times and further may continue to ease from the inflation.
Strong Business Growth in the last five years The business of the Andhra Bank has been grown at CAGR of 20% is last five years (FY08-FY11). As on 31st March 2011 the total deposits of the bank grew by 22% to Rs 921.56 bn while the Advance for the same period grew at 26% to Rs 714.35 bn. The Credit over every deposit ratio of the bank also stood at 77.5% for the FY11.
Strengthening its Agriculture financing in North region also After expanding its presence in southern states Andhra Bank is now looking to expand its business in northern states also. Bank is expert is financing agricultural infrastructure projects and therefore ready to in UP also it is ready to carve a niche in lending to rice mills, sugar mills, cold storage and ware-housing projects.
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