Andhra Bank, a public sector bank is concentrated mainly in Andhra Pradesh. The bank is in the news for having one of the lowest Non Performing Assets (NPAs). During the last 5 years, bank’s official NPA was just 0.2% of the total advances. This included even the personal loans.
As NPA shows the bank’s performance, it low levels indicates Andhra bank has one of the best in asset quality. The bank has seen a hike in its loans that exceeds the industry average. Its loans have gone up by 28% from FY05-FY09.
The 2nd quarter results of the bank in December 2009 have posted increase in advances at 22 % which is twice the industry rates. The credit deposit ratio of the bank was recorded at a stupendous 77.5% one of the highest in the industry.
This shows the bank’s efficiency during the period the sector was facing reduction in credit expansion. The bank has continued to retain its growth higher than the industry average, while its peers are struggling to reach the level due to financial crisis.
Even during the periods of financial crisis, Andhra Bank managed to post 30% increase in profits. The increase in profit occurred due to 29% increase in net interest income (NII) and some control of expenditure. It has retained an average net interest margin (NIM) of about 3.5% during the previous 5 financial years.
Moreover the bank’s provision coverage ratio was 90% towards the end of December 2009, thus showing that the bank has provided adequate provision for bad debts.
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