Non-performing assets (NPA) will continue to impact the performance of Andhra Bank in the third quarter, C. V. R. Rajendran, who took over as the Chairman and Managing Director of the bank recently, said here on Thursday.Speaking to The Hindu over phone, he said, “The NPAs will continue to impact the third quarter. There are some more slippages left on the NPA front in the current quarter. We do not know about the fourth quarter though.” Going by the broad indications of the Reserve Bank of India, the bank was not keen on lending to commercial real estate, he added.
“Owing to the global trends and the instructions of the RBI, the lending to activities in capital markets and commercial realty are always unwanted and least priority,” he said. The real estate sector is one of the major areas where the bank has taken a hit.
The Rs.200-crore plus account of Deccan Chronicle Holdings Ltd (DCHL) is one of the major accounts in the NPA arena.
The loan has 110 per cent mortgage back up, but the issue of multiple mortgages by DCHL is a concern for the bank. The bank is expected to auction the properties of DCHL shortly.
At present, the dipping profits and the growing NPAs are the key concerns before the new CMD.
The net profit of the bank in the second quarter by the end of September 30, 2013, was down by 78 per cent to Rs.71 crore from Rs.326 crore last year.
Net NPAs of the bank were up from 2.16 per cent last year to 3.54 per cent this year.
The total business of the bank was Rs.2.30 lakh crore.