Surging credit offtake in the first quarter of FY 2010-11 has brightened hopes of Andhra Bank. The lender has set target of 25-27% growth in its loan book this fiscal. Decline in cost of deposits has led the bank to estimate its net interest margin (NIM) at 3.5% for the year.

The first quarter of this fiscal has booked an operating profit of Rs 510 crore which is a rise by 47%. The net profit for the quarter has been Rs 320 crore which is again a 25% rise. The net interest income has risen by 66.89% at Rs 736 crore. The NIM has risen from 2.85% to 3.72%.

The bank's total business has shown a 25% rise amounting of Rs 1,31,844 crore. There has been a rise in deposits and advances too. The deposits have risen by 22.64% to Rs 74, 700 crore while advances have shown a 27.24% rise to Rs 57,144 crore.

"Retail, MSME and corporate lending are proving to be key contributors to the growth in net interest income and net interest margin. Retail credit rose by 36.69% while MSME advances increased by 46.6% in the first quarter. The corporate lending increased by 21.31%," R S Reddy, CMD, said.

"We are above the industry level in all parameters now. The outlook for growth during this year appears good and we expect to do better in the next three quarters," Reddy said.

The bank is however keeping a watch on the liquidity aspect too.