Andhra Bank sees pressure on NIM post RBI rate hike

Hyderabad-based public sector lender Andhra Bank today said there could be some pressure on its Net Interest Margin (NIM) and credit off take in the short- term range, following a hike in key policy rates by the Reserve Bank of India (RBI).

The bank reported a net profit of Rs 386 crore for the quarter ended June 30 in FY12, up 20.63% over the same period last fiscal.

The pressure on NIM could be in the range of 15-20 basis points for the present quarter, the bank's Chairman and Managing Director R Ramachandran said.

"I presume that there will be an impact of 15 to 20 basis points during this quarter. Beyond that what will happen in the remaining quarters depend on how things will happen," Ramachandran told mediapersons here after announcing the first quarter results.

The NIM stood at 3.77% for the first quarter as against 3.72% during the Q1 of the previous fiscal.

To a query, Ramachandran said the bank would take a call on increasing interest rates after a meeting with officials of assets and liability teams.

On the demand for credit, he said there would be some slow down in the credit off take due to interest rate hike.

"I anticipate a little bit slow down going forward and there is possibility that the credit growth in the remaining one or two quarters will be slower. Generally, the industry shows slow down in the credit growth," the banker said.

The bank's total income stood at Rs 2,851 crore in the quarter, up 37.53% over last year, while operating profits are at Rs 700 crore as against Rs 510 crore during the corresponding quarter in the last year.

Source: Business Standard