Jan. 31: State-owned lender Andhra Bank on Monday posted a 20.36 per cent jump in net profit for the third quarter of the financial year11 on the back of low cost of funds. The bank’s net profit was Rs 331 crore in Q3FY11 as against Rs 276 crore in year ago period.
According to the bank’s chairman and managing director, Mr R. Ramachandran, the bank has improved its net interest margin to 3.91 per cent — the highest ever — for the quarter as the bank’s lending rates were higher as compared to deposits rates last year.
However, he expects the bank to witness a dip in net interest margin in the last quarter of fiscal 2011 as deposit rates are going up. “The pressure on the margin,” he said, “could be in the range of 10 to 20 basis points and could hit the profitability.” He, however, added that the bank would try to neutralise the effect by increasing recoveries.
According to the bank’s executive director, Mr Anil Girotra, “The bank would be expanding its network to 500 villages through bank correspondents by March 2011. Through them, we would be opening three lakh savings accounts and hope to raise more than `300 crore of low cost deposits.” The bank would expand its BC network to 1,144 villages by March 2012.
Mr Girotra also said that the bank would be setting up 60-70 branches in the next two months across India.