1QFY2014 Result Update | Banking

August 12, 2013

Andhra Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT 1QFY14 874 746 231 4QFY13 953 714 345 % chg (qoq) (8.3) 4.6 (32.9) 1QFY13 938 703 362 1QFY14 (6.9) 6.1 (36.1)

NEUTRAL
CMP Target Price
Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code Banking 3,285 1.2 130/55 154,296 10 18,789 5,566 ADBK.BO ANDB@IN

`59 -

Source: Company, Angel Research

Andhra Bank reported a disappointing operating performance for the quarter, with NII de-growth of 6.9% yoy. Boosted by treasury gains of `286cr compared to `25cr in 1QFY2013, the non-interest income for the bank almost doubled on a yoy basis. Overall the operating profit grew at a subdued pace of 6.1% yoy. On the asset quality front, stress continued as Gross and Net NPA levels increased sequentially by 27.8% and 33.3% respectively. Consequently, the provisioning for the bank increased by 86.3% yoy, thereby resulting in earnings de-growth of 36.1% yoy. NIM declines sequentially; Asset quality faces persistent stress: During 1QFY2014, the bank witnessed a healthy growth in its business, as advances and deposits grew by 16.0% and 16.8% yoy, respectively. Healthy advance growth was largely aided by strong growth in agri and SME book, which grew by 34.2% and 28.4% yoy respectively. CASA ratio declined by 267bp yoy and 163bp qoq to 24.0%. Reported NIM dipped by 34bp qoq to 2.7%, on account of 65bp sequential fall in yield on advances, which more than offset the 18bp qoq decline in cost of deposits. Non-interest income (excluding treasury) de-grew by 14.0% yoy, which was largely due to 4.5% yoy de-growth in CEB income and weak performance on the recoveries front. The bank continued to witness asset quality pressures, as slippages came in at `1,180cr (annualized slippage ratio of 4.5%) as compared to `889cr (slippage rate of 4.3%) in 4QFY2013. Recoveries/upgrades came in lower during the quarter at `103cr compared to `349cr in 4QFY2013. The PCR dipped substantially by 455bp sequentially to 45.0%, amongst the lowest in the industry. During the quarter, the bank also restructured advances worth `650cr, thereby taking its total restructured book to `9,846cr (9.8% of total advances). The Management has guided for advances worth ~`3,300cr to be in the restructuring pipeline for 1QFY2014, which includes an advance of ~`2,000cr to AP SEB, `385cr to a private sector power player, and `135cr to a steel player. Outlook and valuation: We believe that the asset quality pressures for the banking sector are unlikely to abate as quickly as was expected earlier, considering the recent macro developments amidst an overall weak macro environment. Moreover, the banks relatively high risk exposures, particularly to sectors like power, iron and steel and textile, create risk of higher deterioration in asset quality over the next few quarters, in our view. Hence, we recommend Neutral rating on the stock. Key financials (standalone)
Y/E March (` cr) NII % chg Net profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) RoA (%) RoE (%) FY2012 3,759 16.7 1,345 6.1 3.3 24.0 2.5 0.5 1.2 19.2 FY2013 3,757 (0.1) 1,289 (4.1) 2.8 23.0 2.6 0.5 1.0 16.2 FY2014E 3,686 (1.9) 687 (46.7) 2.4 12.3 4.9 0.5 0.4 7.9 FY2015E 4,250 15.3 930 35.4 2.5 16.6 3.6 0.4 0.5 10.0

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 58.0 12.4 13.6 16.1

Abs. (%) Sensex Andhra Bank

3m (6.0) (35.4)

1yr 6.8 (41.1)

3yr 3.6 (58.7)

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Sourabh Taparia
022 3935 7800 Ext: 6872 sourabh.taparia@angelbroking.com

Harshal Patkar
022 3935 7800 Ext: 6847 harshal.patkar@angelbroking.com

Source: Company, Angel Research; Note: CMP as of August 8, 2013

Please refer to important disclosures at the end of this report

Andhra Bank | 1QFY2014 Result Update

Exhibit 1: 1QFY2014 performance (standalone)

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - CEB - Treasury Income - Recoveries from writ.-off acc - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Provisions for Investments - Other Provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

1QFY14 3,386 2,722 654 11 2,513 874 468 182 62 286 12 108 1,342 595 385 210 746 385 276 1 108 361 130 231 36.0

4QFY13 3,359 2,645 691 23 2,406 953 354 249 75 105 43 131 1,307 594 381 213 714 365 187 66 112 349 4 345 1.1

% chg (qoq) 0.8 2.9 (5.4) (52.7) 4.4 (8.3) 32.1 (27.0) (17.4) 171.5 (71.9) (17.5) 2.6 0.3 1.0 (1.1) 4.6 5.4 47.6 (98.5) (3.8) 3.7 3,199.5 (32.9) 3485bp

1QFY13 3,121 2,520 579 22 2,183 938 236 211 65 25 44 103 1,174 471 297 174 703 207 157 13 36 497 135 362 27.2

1QFY14 8.5 8.0 12.9 (51.2) 15.1 (6.9) 98.4 (14.0) (4.5) 1,061.4 (72.3) 5.0 14.3 26.5 29.8 20.8 6.1 86.3 75.5 (92.6) 201.0 (27.3) (3.7) (36.1) 881bp

FY2013 12,910 10,327 2,476 89 18 9,153 3,757 1,047 883 273 164 125 485 4,804 2,037 1,287 750 2,767 996 615 96 285 1,771 482 1,289 27.2

FY2012 11,339 9,278 1,974 75 12 7,579 3,759 860 739 262 121 37 440 4,619 1,804 1,150 654 2,815 991 482 61 448 1,824 480 1,345 26.3

% chg 13.9 11.3 25.4 18.8 49.3 20.8 (0.1) 21.8 19.5 4.2 36.0 236.7 10.2 4.0 12.9 11.9 14.7 (1.7) 0.5 27.6 58.4 (36.4) (2.9) 0.5 (4.1) 92bp

Exhibit 2: 1QFY2014 Actual vs. Angel estimates

Particulars (` cr) Net interest income Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 874 468 1,342 595 746 385 361 130 231

Estimates 976 235 1,211 522 689 222 467 117 350

Var. (%) (10.4) 98.6 10.8 14.0 8.3 73.4 (22.7) 11.3 (34.0)

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Exhibit 3: 1QFY2014 performance (standalone)

Particulars (` cr) Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Tier 1 CAR (%) Profitability Ratios (%) Cost of deposits Yield on advances Yield on investments Yield on funds Cost of funds Reported NIM Cost-to-income ratio Asset quality Gross NPAs (` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) Loan loss prov. to avg assets (%)
Source: Company, Angel Research

1QFY14 4QFY13 100,439 79.8 6,047 24,182 30,229 24.0 11.5 8.4 7.8 11.2 7.6 9.3 6.9 2.7 44.4 4,748 4.7 3,212 3.3 45.0 4.5 0.7 98,373 79.5 7,029 24,730 31,759 25.7 11.3 8.5 7.9 11.9 7.9 9.6 6.9 3.0 45.4 3,714 3.7 2,409 2.5 49.6 4.3 0.5

% chg (qoq) 1QFY13 2.1 36bp (14.0) (2.2) (4.8) (163)bp 20bp (9)bp (18)bp (65)bp (37)bp (30)bp 3bp (34)bp (104)bp 27.8 102bp 33.3 82bp (455)bp 30bp 22bp 86,612 80.4 6,269 22,485 28,754 26.7 12.7 8.7 7.7 12.1 7.9 10.0 7.0 3.3 40.1 2,358 2.7 1,293 1.5 60.4 4.0 0.5

% chg (yoy) 16.0 16.8 (60)bp (3.5) 7.5 5.1 (267)bp (122)bp (25)bp 1bp (84)bp (36)bp (68)bp (8)bp (63)bp 428bp 101.3 201bp 148.4 175bp (1536)bp 56bp 25bp

125,826 123,796

1.6 107,695

Business growth healthy; NIM declines by 34bp sequentially

During 1QFY2014, the bank witnessed a healthy growth in business, with advances and deposits registering a growth of 16.0% and 16.8% yoy, respectively. The healthy growth in advance was largely aided by strong growth in Agri and SME book, which grew by 34.2% and 28.4% yoy, respectively. Growth in retail loan book also remained strong at 26.5% yoy. On the liabilities front, savings deposits registered a moderate growth of 7.5% yoy, while current deposits de-grew by 3.5% yoy. Consequently, overall CASA deposits grew at a subdued 5.1% yoy; hence the CASA ratio dipped by 267bp yoy and 163bp qoq to 24.0%. The reported NIM for the bank dipped by 34bp qoq to 2.7%, on account of a 65bp sequential fall in yield on advances, which more than offset the 18bp qoq decline in costs of deposits. Yield on advances declined by 65bp qoq, on account of interest reversal of `97cr and full effect of base rate reduction in February, 2013 felt during the quarter. Yield on investments for the bank declined by 37bp qoq to 7.6%.

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Exhibit 4: Business growth healthy

Adv. yoy chg (%) 20.0 80.4 80.3 79.5 10.0 78.5 78.5 79.8 Dep. yoy chg (%) CDR (%, RHS) 81.5 80.5 79.5

Exhibit 5: CASA ratio declines sequentially

CASA ratio 27.0 26.0 25.0 24.0 5.1 13.6 14.0 11.4 CASA yoy growth (%, RHS) 13.6 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

26.7

25.9

26.0

25.7

14.4 18.5

15.9 15.0

14.0 14.0

17.6 17.0

16.0 16.8

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Source: Company, Angel Research

76.5

22.0

Source: Company, Angel Research

Exhibit 6: 65bp qoq lower Yield on advances, result in..

12.40 12.00 11.60 11.20 10.80 10.40 10.00 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 12.08 12.00 12.05

Exhibit 7: ..34bp sequential fall in reported NIM

(%) 3.60 3.33 3.13 3.35 3.04 2.70

11.89

3.20
11.24

2.80 2.40 2.00 1QFY13 2QFY13 3QFY13 4QFY13

24.0

77.5

23.0

1QFY14

Source: Company, Angel Research

Source: Company, Angel Research

De-growth in CEB income and lower recoveries, but strong treasury aid robust growth in non-interest income
During 1QFY2014, the non-interest income (excluding treasury) de-grew by 14.0% yoy to `182cr, which was largely due to 4.5% yoy de-growth in CEB income to `62cr and weak performance on recoveries front. Recoveries came in lower during the quarter at `12cr compared to `44cr in 1QFY2013. Income from exchange transactions grew at a moderate pace of 9.5% to `28cr. Treasury gains for the bank came in much higher at `286cr compared to `25cr in 1QFY2013, thereby aiding the overall non-interest income to almost double on a yoy basis to `468cr.

Elevated slippages coupled with lower recoveries/upgrades resulted in persistent asset quality stress
During 1QFY2014, the asset quality for the bank continued to see stress, as its gross and net NPA levels increased sequentially by 27.8% and 33.3%, respectively. Consequently, gross and net NPA ratios were higher by 102bp and 82bp qoq respectively to 4.7% and 3.3%. During the quarter, slippages came in at `1,180cr (annualized slippage ratio of 4.5%) as compared to `889cr (slippage ratio of 4.3%) in 4QFY2013. Almost `421cr of the slippages during the quarter came from its restructured book. Going ahead, the Management expects further slippages to come from restructured book. Recoveries/upgrades came in lower during the

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

quarter at `103cr compared to `349cr in 4QFY2013. PCR dipped substantially by 455bp sequentially to 45.0%, amongst the lowest in the industry. During the quarter, the bank also restructured advances worth `650cr, thereby taking its total restructured book to `9,846cr (9.8% of total advances). The Management has guided for advances worth ~`3,300cr to be in the restructuring pipeline for 1QFY2014, which includes an advance of ~`2,000cr to AP SEB, `385cr to a private sector power player and `135cr to a steel player.

Exhibit 8: Asset quality stress continues...

Gross NPAs (%) 5.0 4.0 3.0 2.0
2.7 1.5 3.5 2.2 3.7 2.3 3.7 2.5 4.7 3.3

Exhibit 9: ...on back of elevated slippages

PCR (%, RHS) 75.0

Net NPAs (%) 52.4

5.0 4.0 3.0 2.0

4.0

Slippages (%)

Credit cost (%, RHS) 0.7 0.5 0.5

0.8 0.6 0.4 0.2

60.4

53.2

49.6 45.0

60.0 45.0 30.0 15.0 -

0.5 0.4

3.7

2.2

4.3

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Source: Company, Angel Research

4.5

1.0

1.0 -

1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Source: Company, Angel Research; Note: PCR including tech. write-offs

Exhibit 10: Cost-to-income lower sequentially

Cost-to-income ratio (%) 46.0 44.0 42.0 40.0
40.1 42.7 41.1 45.4 44.4

Exhibit 11: Employee expenses trends

Staff expenses (`cr) QoQ growth (% , RHS)

Opex to average assets (%, RHS) 1.7 1.6 1.8 1.7 1.6 1.5 1.4 1.3
500 400 300 200

22.2

25.0 20.0 15.0

1.5

1.5

1.5

5.1 0.1 (6.8) 1.0

10.0 5.0 -

297

297

312

381

385

38.0 36.0

100 -

(5.0) (10.0)

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

Source: Company, Angel Research

Source: Company, Angel Research

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Investment concerns
Moderate fee income; low CASA
During FY200712, fee income for the bank reported a CAGR of only 10.9% compared to advances posting a CAGR of 23.4%. Consequently, fee income as a proportion of overall assets for the bank has declined from 1.1% in FY2007 to 0.6% in FY2013. On the CASA front, the banks market share has fallen by 26bp over FY2005-FY2013; and at 24.0% as of 1QFY2014, the banks CASA ratio is on the lower end compared to peers.

Risk-adjusted yields continue trending lower

The bank had one of the highest yields in the industry (at 12.5% for FY2012), which also reflected in its relatively healthy NIM (at 3.7% for FY2012), which was partly attributed to the banks high concentration in the hinterland of its home state. We believed that it would be difficult for the bank to remain insulated from competition on the lending side and as a result, as expected, its yield on advances and margins declined to 12.0% and 3.2%, respectively in FY2013 and further came in lower at 11.2% and 2.7%, respectively for 1QFY2014. Moreover, the banks provisioning expenses as a proportion of average assets have also increased from 0.65% for FY2011 to 0.75% for FY2013 and 1QFY2014. Going forward, in the current environment, the banks provisioning expenses are likely to increase at a faster rate, given the high yield on advances and relatively high exposure to stressed sectors.

Outlook and valuation

We believe that the asset quality pressures for the banking sector are unlikely to abate as quickly as was expected earlier, considering the recent macro developments amidst an overall weak macro environment. Moreover, the banks relatively high risk exposures, particularly to sectors like power, iron and steel and textile, create risk of higher deterioration in asset quality over the next few quarters, in our view. Hence, we recommend Neutral rating on the stock.

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Exhibit 12: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Coverage Ratio
Source: Angel Research

Earlier estimates FY2014 14.0 14.0 24.8 2.7 (2.3) 10.0 7.5 2.9 56.0 FY2015 14.0 14.0 24.5 2.7 10.1 10.0 7.5 2.9 60.0

Revised estimates FY2014 13.0 13.0 25.0 2.4 12.9 15.0 12.5 3.5 48.5 FY2015 14.0 14.0 24.8 2.5 (3.6) 7.5 7.5 3.0 52.5

Exhibit 13: Change in estimates

FY2014 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

Earlier estimates 4,156 1,024 5,180 2,222 2,958 1,480 1,478 414 1,064

Revised Var. (%) estimates 3,686 (11.3) 1,183 4,868 2,324 2,544 1,504 1,040 354 687 15.5 (6.0) 4.6 (14.0) 1.7 (29.6) (14.6) (35.5)

Earlier estimates 4,688 1,127 5,815 2,424 3,391 1,450 1,941 660 1,281

FY2015 Revised Var. (%) estimates 4,250 (9.3) 1,140 5,390 2,498 2,892 1,483 1,408 479 930 1.1 (7.3) 3.1 (14.7) 2.3 (27.4) (27.4) (27.4)

Exhibit 14: P/ABV band

240 200 160 120 80 40 0
Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11 Dec-12 Aug-13 Apr-02 Apr-04 Apr-06 Apr-08 Apr-10 Apr-12

Price (`)

0.6x

0.8x

1x

1.2x

1.4x

Source: Company, Angel Research

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Exhibit 15: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI# IndBk IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk Reco. Buy Neutral Buy Buy Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral Neutral CMP (`) 1,086 318 611 875 20 283 71 59 512 170 40 244 57 272 46 58 72 40 1,013 141 540 1,661 72 56 117 35 37 Tgt. price (`) 1,255 745 1,038 Upside (%) 15.6 22.0 18.6 FY2015E P/ABV (x) 1.2 0.7 2.9 1.3 0.8 1.2 0.4 0.4 0.6 0.4 0.4 0.5 0.6 0.3 0.3 0.3 0.3 0.3 0.8 0.3 0.5 0.9 0.4 0.5 0.4 0.3 0.4 FY2015E Tgt. P/ABV (x) 1.4 3.5 1.5 FY2015E P/E (x) 6.9 6.1 13.6 9.1 4.9 5.7 2.4 3.5 4.1 2.7 3.4 4.0 3.6 2.8 2.1 2.6 2.2 2.7 5.0 2.7 3.3 5.8 3.1 3.6 2.9 1.7 4.1 FY13-15E EPS CAGR (%) 19.1 2.9 26.3 15.8 5.7 16.9 12.6 (15.1) 8.3 16.2 5.4 (3.4) 40.1 2.3 (3.3) 25.1 (4.2) 57.5 (3.5) 7.4 10.8 17.5 (16.0) 66.4 6.2 54.6 (0.4) FY2015E RoA (%) 1.6 1.0 1.9 1.6 0.9 1.3 0.6 0.5 0.8 0.7 0.5 0.6 0.5 0.7 0.6 0.8 0.8 0.5 1.3 0.6 1.0 1.0 0.6 0.6 0.6 0.6 0.4 FY2015E RoE (%) 18.1 12.3 22.8 15.4 16.2 22.8 12.4 10.0 14.2 13.9 14.1 10.4 12.8 13.5 13.2 13.3 12.4 10.5 16.3 11.1 15.7 17.0 12.8 13.5 13.4 14.7 9.8

Source: Company, Angel Research; Note: *Target multiples=SOTP Target Price/ABV (including subsidiaries); # without adjusting for SASF

Company Background
Andhra Bank is a mid-sized PSU bank, with a balance sheet size of ~`1.5lakh cr. The bank has a network of over 1,880 branches, mainly concentrated in the southern region (~two-third of total branches in the parent state of Andhra Pradesh).

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Income statement (standalone)

Y/E March (` cr) NII - YoY growth (%) Other income - YoY growth (%) Operating income - YoY growth (%) Operating expenses - YoY growth (%) Pre-prov. profit - YoY growth (%) Prov. & cont. - YoY growth (%) PBT - YoY growth (%) Prov. for taxation - as a % of PBT PAT - YoY growth (%) FY10 2,195 34.9 965 26.0 3,159 32.1 1,350 22.2 1,810 40.5 374 (4.1) 1,436 59.9 390 27.2 1,046 60.1 FY11 3,221 46.8 897 (7.0) 4,118 30.3 1,705 26.3 2,413 33.3 646 72.8 1,767 23.1 500 28.3 1,267 21.2 FY12 3,759 16.7 860 (4.1) 4,619 12.2 1,804 5.8 2,815 16.7 991 53.3 1,824 3.2 480 26.3 1,345 6.1 FY13 3,757 (0.1) 1,047 21.8 4,804 4.0 2,037 12.9 2,767 (1.7) 996 0.5 1,771 (2.9) 482 27.2 1,289 (4.1) FY14E 3,686 (1.9) 1,183 12.9 4,868 1.3 2,324 14.1 2,544 (8.1) 1,504 51.0 1,040 (41.3) 354 34.0 687 (46.7) FY15E 4,250 15.3 1,140 (3.6) 5,390 10.7 2,498 7.5 2,892 13.7 1,483 (1.4) 1,408 35.4 479 34.0 930 35.4

Balance sheet (standalone)

Y/E March (` cr) Share Capital Reserves & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab. & Prov. Total Liabilities Cash Balances Bank Balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY10 485 3,925 77,688 30.8 2,832 3,020 2,392 6,699 4,469 20,881 56,114 27.1 356 1,825 31.9 FY11 560 5,933 92,156 18.6 4,620 3,020 2,612 7,184 3,275 24,204 71,435 27.3 317 2,485 20.5 FY12 560 6,920 105,851 14.9 5,221 3,020 2,974 124,545 5,564 3,082 29,629 83,223 16.5 303 2,745 124,545 14.4 FY13 560 7,882 123,796 17.0 8,099 3,020 2,943 146,299 6,022 767 37,632 98,373 18.2 303 3,200 146,299 17.5 FY14E 560 8,404 13.0 9,111 2,945 3,667 6,295 2,469 40,719 13.0 331 3,600 12.5 FY15E 560 9,105 14.0 10,338 2,871 4,390 7,176 2,801 45,586 14.0 364 4,085 13.5

139,889 159,473

90,342 108,901

164,575 186,737

111,162 126,724

90,342 108,901

164,575 186,737

August 12, 2013

Andhra Bank | 1QFY2014 Result Update

Ratio analysis (standalone)

Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov. /Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS (75% cover.) DPS Valuation Ratios PER (x) P/ABVPS (x) Dividend Yield DuPont Analysis NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage RoE 2.8 0.5 2.3 0.4 2.7 0.8 3.5 1.7 1.8 0.5 1.3 19.7 26.0 3.2 0.6 2.6 0.1 2.7 0.8 3.5 1.7 1.8 0.5 1.3 18.3 23.2 3.2 0.8 2.4 0.1 2.5 0.6 3.1 1.5 1.6 0.4 1.2 16.7 19.2 2.8 0.7 2.0 0.1 2.2 0.6 2.8 1.5 1.3 0.4 1.0 17.0 16.2 2.4 1.0 1.4 0.2 1.6 0.6 2.2 1.5 0.7 0.2 0.4 17.9 7.9 2.4 0.8 1.6 0.0 1.6 0.6 2.2 1.4 0.8 0.3 0.5 18.9 10.0 2.8 0.7 8.4 2.6 0.5 9.2 2.5 0.5 9.2 2.6 0.5 8.4 4.9 0.5 4.2 3.6 0.4 5.9 21.6 90.9 5.0 22.6 116.0 5.5 24.0 131.9 5.5 23.0 129.1 5.0 12.3 126.1 2.5 16.6 136.6 3.5 0.9 0.2 0.9 0.4 91.6 1.4 0.4 1.4 0.5 83.9 2.1 0.9 1.8 0.4 71.1 3.7 2.4 3.3 0.5 49.6 5.4 3.3 3.5 0.7 48.5 6.1 3.4 3.0 0.7 52.5 29.4 72.2 13.9 8.2 29.1 77.5 14.4 9.7 26.4 78.6 13.2 9.0 25.7 79.5 11.8 8.5 25.0 79.5 10.9 8.0 24.8 79.5 10.1 7.6 2.8 42.7 1.3 26.0 3.3 41.4 1.3 23.2 3.3 39.1 1.2 19.2 2.8 42.4 1.0 16.2 2.4 47.7 0.4 7.9 2.5 46.4 0.5 10.0 FY10 FY11 FY12 FY13 FY14E FY15E

August 12, 2013

10

Andhra Bank | 1QFY2014 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Pvt. Ltd., its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Pvt. Ltd. or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt. Ltd. has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Pvt. Ltd. endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Pvt. Ltd. and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Pvt. Ltd., nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Ltd. and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

Andhra Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to -15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

August 12, 2013

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