Andhra Bank is to come up with some major changes in its business model and product mix. The business model has been tried by the bank and the encouraging results received have led it to lay focus on the new model. The bank had reduced emphasis on corporate lending last fiscal and has increased focus on areas like agriculture loans, micro, small and medium enterprises (MSME) and retail.

"We have reduced our dependence on big ticket corporate loans and the yields in other sectors like MSME and retail credit have been higher," R S Reddy, Andhra Bank's CMD, said.

"Instead of focusing on the corporate sector, we tried to make use of our well established network in the country by focusing on other sectors of the loan portfolio. As a result, we have recorded a growth of 35.46% in agriculture loans, 55% in the MSME sector and about 48% rise in retail credit," Reddy said.

The bank has recorded a gross advance amount of Rs. 56, 505 crore in the last fiscal which means a 27.19% rise. Lending to priority sector comprised about Rs 19,012 crore, up 27% compared with the previous fiscal. agricultural sector loans grew to Rs 9,057 crore, MSME loans constituted Rs 8,285 crore. Retail loans amounted to about Rs 8,920 crore.

Cost of deposits for the bank reduced to 6.1% compared with 6.96% in 2008-09. However, the cost of funds dropped to 5.57% from 6.26% in FY09.

The bank could cross the net profit mark of Rs. 1000 crore for the full year for the first time.

"We had also raised funds through certificate of deposits (CDs) when rates were low. Our CD funds during FY10 were at Rs 14,588 crore, a growth of 105% from the previous year," Reddy said.

Provisioning for NPAs has crossed 90% for the bank. "Our provisioning has traditionally been at higher level. The economy has not fully recovered. So, we have gone in for higher provisioning," Reddy said.