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Andhra Bank

Andhra Bank - Results Update.

Andhra Bank has reported a profit after tax (PAT) of Rs212.7 crore in Q3FY2009 indicating an increase of 33.7% year on year (yoy).
The net interest income (NII) for Q3FY2009 registered a healthy growth of 29.3% yoy and stood at Rs451.9 crore on account of a strong 34.2% year-on-year (y-o-y) growth in the advances coupled with an 8-basis-point y-o-y increase in the calculated net interest margin (NIM), which stood at 2.88%.

The operating expenses increased by 28.9% yoy during the quarter as employee expenses increased at a much faster pace of 40.9% yoy, while other operating expenses grew by 16.5% yoy. During the quarter the bank made an ad-hoc provision of Rs40 crore towards pending settlement for wage revision. However, despite this increase the cost to income ratio was contained at 44.3% in Q3FY2009 vs 51.1% in Q2FY2009.
Notably the provisions declined by 10.5% yoy to Rs24.9 crore as compared with Rs27.8 crore in Q3FY2008, which boosted the bottom line.

In Q3FY2009, the advances grew by a robust 34.2% yoy to Rs42,027 crore, while the deposits registered a growth of 22.5% yoy. Notably the current account and savings account (CASA) ratio of the bank declined sequentially by 230 basis points and stood at 31.8% for the quarter. Further decline in CASA ratio can keep the margins under pressure going forward.

The capital adequacy ratio (CAR) stood at comfortable 12.69% as compared with 12.03% during the year-ago period.

At the current market price of Rs55, the stock trades at 4.1x FY2010E earnings per share, 2.2x FY2010E pre-provisioning profit and 0.7x FY2010E book value.