Government-owned, Andhra bank has recently raised a capital of Rs. 280 crore through upper tier-2 bonds and Rs. 320 crore through lower tier-2 bonds. This will help the bank in increasing its capital base.

The bank is mid-sized. At the end of the September ‘09 quarter, the banks capital adequacy ratio (CAR) was 13 percent, well above the RBI mandated 9 percent.

Lately, most banks with sufficient capital have raised funds to meet the requirements of expected growth. These banks are those that are growing with a very fast pace. Andhra Bank is one amongst these banks. It has posted good growth numbers in the current year.

The bank's profit grew 122 percent year-on-year in the first half of the current fiscal. At the end of the September '09 quarter, the banks loan book grew by 32 percent when the average credit growth of the industry dipped to 11 percent.

When most banks are facing problems with the declining net interest margins (NIM), spread between yield on advances and cost of deposits, Andhra bank has managed to maintain a net interest margin of over 3 percent.

Even in a scenario where other banks faced difficult times with rising bad loans, Andhra bank managed to improve its asset quality. Net non performing assets (NPAs) formed a meager 0.16 percent of net advances at the end of the September '09 quarter as against 0.24 percent a year ago. The bank is one of the best in terms of asset quality.

Despite a low NPA, the bank has a provision coverage ratio of 84 percent.

In the previous five years, Andhra bank's performance was at par with its peer and the annual growth rate grew at a compounded annual rate of just 7 percent. However, the recent capital raising and its current performance reflect a turnaround.