Andhra Bank’s Q3 earnings were better than analyst estimates but asset quality deteriorated.

Throwing more light on the numbers, J Packirisamy, MD and CEO of the bank said, “We had stated that there would be a slippage of Rs 1,500 crore. We have been able to contain the slippages within what we had estimated the last time. Few large accounts which we had expected to fall have fallen. That is why the numbers have gone up. Otherwise, in terms of overall net profit, the numbers are substantially high primarily because the net interest margins (NIM) have been steady at 3.25 percent for the nine month period and for the quarter it has gone up to 3.40 percent.”

“In terms of the corporate accounts, the two major slippages were DHFL and Reliance Commercial Finance. The slippages in terms of corporates for the entire nine-months period is about Rs 2,660 crore of which we have been able to recover Rs 2,225 crore. So corporate book has been retained at the same level," he said, adding that MSMEs is one place where our slippages are around 15 percent and that remains as it is. This quarter we expect the slippages in MSME to be around 4 percent and in agriculture 1 percent for the nine-month period.

"This quarter, we expect the slippages to be around Rs 1,100 crore. Almost all the larger accounts have slipped. Effectively, this quarter’s slippages will be contained at Rs 1,200 crore – that is our aim,” he added.

In terms of recoveries, Packirisamy said, “Recoveries for this quarter are around Rs 1,500 crore. As of now the expected recovery for Q4 is Rs 3,900 crore of which we expect Rs 2,600 crore from National Company Law Tribunal (NCLT), the balance is about Rs 1,370. We are fairly comfortable with the balance.”