BWI: Brickwork Ratings Reaffirms “BWR AA+” for Andhra Bank’s Perpetual (Tier I) Bonds Issue of INR 200 Crore or INR 2 Billion

Press release from Business Wire India
Source: Brickwork Ratings
Wednesday, December 30, 2009 10:00 AM IST (04:30 AM GMT)
Editors: General: Consumer interest, Economy; Business: Accounting & management consultancy services, Advertising, PR & marketing, Banking & financial services, Business services, Financial Analyst, Stock exchanges
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Brickwork Ratings Reaffirms "BWR AA+" for Andhra Bank's Perpetual (Tier I) Bonds Issue of INR 200 Crore or INR 2 Billion
Issue Rating: BWR AA+; Outlook: Stable

Bangalore, Karnataka, India, Wednesday, December 30, 2009 -- (Business Wire India) -- Brickwork Ratings has reaffirmed "BWR AA+" (Pronounced BWR Double A plus) for Andhra Bank's Perpetual (Tier I) Bonds issue of Rs.200 crore. Brickwork Ratings BWR AA+ signifies 'High Safety' and the Rating Outlook further signifies the direction of the rating being stable in the near term. Brickwork has relied upon the audited financial statements and information and clarifications provided by the issuer.

During FY 09, the bank has adopted several business development initiatives to grow its business and one important initiative is to bring all the branches under core banking solution (CBS). With 100% CBS branches, the bank competently managed the challenging economic conditions during FY 09, to grow its total business by 23.60% to reach Rs 103,818 crore in FY09 as compared to Rs 83,993 crore during FY 08. The bank's total income increased by 26.96% to Rs 4,836 crore during FY 09, reflecting the significant buoyancy in core banking operations, excellent fee based income and focus on healthy earning assets which contributed to improvement in the profitability. As a result, the bank's operating profit and net profit surged 21.86% and 13.46% respectively.

The bank's tier-I capital ratio stood at 8.67% as on 31st March 2009, which is marginally higher than the previous year figure of 8.54% under Basel II. Overall, the bank has reported capital adequacy ratio of 13.22% under Basel II as on 31st March 2009 (11.61% in FY08) while Basel I CRAR was at 12.37%. As a special feature of its rating process, Brickwork calculates the leverage, which assesses the bank's net worth with reference to on and off balance sheet items. During FY 09, the bank's leverage though higher was still comfortable at 18.31 in FY 09 as compared to 16.4 in FY 08.

The Bank has continued to show good performance in Q2 FY 10.Total deposits increased to Rs.62,279 crore, while advances increased to Rs.48,182 crore. The bank has been consistently reducing its non-performing assets. Gross and net NPAs stood at 0.83% and 0.16% respectively in Q2 FY 10. Further, the bank's net profit has surged by 69.61% q-o-q to reach Rs 273 crore in Q2 FY 10. As result, the bank's return on assets has improved to 1.53% in Q2 FY 10 from 1.12% in Q2 FY 09. The loan loss coverage has improved to 83.66% in Q2 FY 10 from 81.49% in FY 09.

The bank was incorporated in 1923. It was nationalized in 1980. The Govt. of India holds 51.55% stake in the Bank. The bank offers retail banking, small and medium enterprise (SME) banking, treasury and financial institutional services. During FY 09, the bank opened 66 branches, and 70 ATMs. The bank's delivery network consists of 1432 branches and 726 ATMs as of 31st March 2009.

The rating factored inter alia, the majority stake held by the Govt of India, comfortable capital adequacy and Tier I capital, lower term loan component in its loan assets, well diversified credit profile, and prudential higher loan loss coverage.

Copyright ©, 2009, Brickwork Ratings.

Brickwork Ratings has assigned the rating based on the information obtained from issuer and other reliable sources, which are deemed to be accurate. Brickwork has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. Brickwork does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by Brickwork should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument. Brickwork has the right to change, suspend or withdraw the ratings at any time for any reasons. Further, Brickwork should not be held responsible for any losses incurred from publishing or reproducing this report.


CONTACT DETAILS
Dr. A. Suresh Kumar, Lead Analyst, Brickwork Ratings, 1-860-425-2742, suresh.kumar@brickworkratings.com
Narahari Prashanthi, Co-Analyst, Brickwork Ratings, 1-860-425-2742, prashanthi.n@brickworkratings.com
Anitha G, Media, Brickwork Ratings, 1-860-425-2742, media@brickworkratings.com
K.N. Suvarna, Sr.Vice President, Business Development, Brickwork Ratings, 1-860-425-2742, kn.suvarna@brickworkratings.com

KEYWORDS
CONSUMER, ECONOMY, CONSULTANCY SERVICES, MARKETING, BANKING, BUSINESS SERVICES, Financial Analyst, STOCK EXCHANGES

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