Analysts expect Andhra Bank to disappoint in Q4 earnings

Public sector lender Andhra Bank will announce its fourth quarter (January-March) numbers on Thursday. According to a CNBC-TV18 poll, the bank is likely to disappoint on all parameters in March quarter as well.

It has been reporting weak earnings since the start of FY13 net interest income, profit after tax and asset quality.

Profit after tax may fall 13 percent year-on-year to Rs 294 crore in fourth quarter. However, net interest income is likely to increase 9 percent to Rs 999 crore from Rs 913.8 crore Y-o-Y.

Also Read - Kotak Mahindra Bank Q4 PAT seen up 23% to Rs 364 cr

In previous quarter (October-December), profit after tax dropped 15 percent Y-o-Y to Rs 257 crore due to high provisions.

Provisions slipped 8 percent to Rs 285 crore versus Rs 309 crore Y-o-Y, but increased 105 percent Q-o-Q to Rs 286 crore in December quarter.

According to analysts, overall asset quality will continue to disappoint with exposure to power most critical.

Asset quality has deteriorated for last three consecutive quarters as gross non-performing asset rose by 116 basis points to 3.88 percent in third quarter from 2.72 percent in Q1FY13 while net non-performing asset increased 77 basis points to 2.29 percent in December quarter FY13 from 1.52 percent in Q1FY13).

Hence, this quarter any recovery will be welcome. However, pressure is expected to be led by stress in mid-corporate segments. Analysts feel restructuring will continue though pace of addition may recede.

Only positive is net interest margin (NIM) that is seen stabilizing. In third quarter, it recovered 20 basis points Q-o-Q to 3.35 percent.

NIM expansion was led by a 33bps Q-o-Q decline in cost of deposit to 7.7 percent.

According to analysts, Y-o-Y loan growth is expected to be 14 percent and deposits 15 percent.