Have no direct exposure to Satyam, Maytas: Andhra Bk

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS Andhra Bank Q3 net profit at Rs 212 cr ALSO READ See latest News about Andhra Bank See previous management interviews See what other Experts & Brokerages are saying about Andhra Bank Andhra Bank BSE | NSE 25/05/12 Are Mutual Funds betting on Andhra Bank?

Andhra Bank has announced its third quarter results. The company's Q3 net profit at Rs 212 crore versus Rs 159 crore.

 

RS Reddy, CMD of Andhra Bank , whose non-performing asset (NPA) stood at 0.21, said the bank had taken many provisions to strengthen its balance. "We have made adequate provisions in all segments and specifically for credit - provisions this quarter is about Rs 42.27 crore and we have taken care of all the provisions. In fact, we have made additional provisions to the extent of Rs 25 crore to take care of any other eventuality."

 

Reddy further added that the bank did not have any direct exposure to either Satyam or Maytas. "We have one special-purpose vehicle (SPV) - ICICI Ventures is a major shareholder in it - we have about 15% equity participation with Maytas. Our exposure is very small exposure - it's a consortium of four banks," he said, adding that the exposure was covered by fixed assets.

 

Here is a verbatim transcript of RS Reddy's exclusive interview on CNBC-TV18. Also watch the accompanying video.

 

Q: The first number that stands out is your net interest margin at 3.35% versus about 3.42% last quarter. What caused this dip and what's the outlook for your margins going forward?

 

A: The net interest margin (NII) of 3.35% is against 3.12% on a year-on-year (YoY) basis. So we have improved by 24 bps during this period. We expect it to continue during this quarter too and we should be able to maintain around 3-3.15% during this quarter.

 

Q: Your net non-performing assets (NPAs) have come down from 0.24 to 0.21 and you indicated that your gross NPAs have come down from 1.35 to 0.89 on a YoY basis. What has been provisioning this quarter in general and specifically for non-performing loans NPLs?

 

A: Our provisioning has been comfortable. We have made adequate provisions in all segments and specifically for credit - provisions this quarter is about Rs 42.27 crore and we have taken care of all the provisions. In fact, we have made additional provisions to the extent of Rs 25 crore to take care of any other eventuality.

 

We wanted to strengthen our balance sheet which is why we started off taking into consideration; we do not want to have surplus profitability that's why our profitability in case of net profit or operative profit are around 29-30%. The net profit is about 32% but we have made adequate provisions for everything.

 

Q: Has there been any major restructuring in any of your advances this quarter and do you have any exposure to Satyam or Maytas for that matter?

 

A: We do not have any exposure to Satyam or Maytas directly. We have one special-purpose vehicle (SPV) - ICICI Ventures is a major shareholder in it - we have about 15% equity participation with Maytas. Our exposure is very small exposure - it's a consortium of four banks.

 

It's a very small exposure and it is adequately covered by fixed assets and as far as restructuring is concerned we haven't done any major restructuring during the last quarter. This quarter we may do some exercise because the micro, small and medium enterprises (MSME) sector going through a bad patch.