Bandhan Bank Q4: Net Profit Falls 80% On Higher Provisions

Bandhan Bank Ltd.'s quarterly profit fell as provisions rose against an elevated level of bad loans.

Net profit fell 80% year-on-year to Rs 103 crore in the January - March quarter, it said in an exchange filing. Analysts polled by Bloomberg had estimated a net profit of Rs 947 crore.

The Kolkata-based lender's net interest income, or core income, rose 4.6% to Rs 1,757 crore as compared with a forecast of Rs 2,094 crore.

Asset Quality

The bank’s gross non-performing asset ratio fell to 6.8% in the quarter ended March, from 7.1% on a pro forma basis as on Dec. 31. Its net NPA rose to 3.5% from 2.4% in the previous quarter.

Provisions rose sharply to Rs 1,594 crore, on account of further provisions carried in its micro-finance portfolio, from Rs 827.36 crore a year ago.

The bank also restructured loans worth Rs 617 crore as of March 31, on account of the Reserve Bank of India’s one time restructuring scheme.

“We have only restructured home loans from our home loan book, have not restructured any loans from the microfinance portfolio,” said Chandrashekhar Ghosh, MD & CEO.

Top up loans, or additional financing provided by the bank to customers in the wake of the Covid-19 pandemic, stood at Rs 260 crore in the Jan-Mar quarter, as compared with Rs 920 crore in the third quarter and Rs 2,370 crore in Jul-Sep.

According to Sunil Samdani, CFO, the bank has not used top-up loans as a way to avoid restructuring dues of its borrowers. The top up loans were only provided to regular customers who were in need of emergency funding and the bank has stayed away from funding customers who have been defaulting on dues, Samdani said.

Bandhan Bank’s overall collection efficiency stood at 95% as of March 31, 2021 as compared with 92% as of December 31, 2020. The bank also stated that in states like West Bengal and Assam, where it has a major presence, the collection efficiencies stood at 95% and 83% respectively.

Loans & Deposits

The bank’s total advances rose 21% to Rs 87,043 crore, which included microfinance loans worth Rs 58,350 crore. Mortgages as of March 31 contributed Rs 20,210 crore, up 8.8% year-on-year.

Deposits rose 36.6% from a year ago to Rs 77,972 crore at the end of the last financial year. Current account savings account deposits constituted 43.4% of total deposits, as compared with 36.8% a year ago and 42.9% as of December 31. Retail deposits constituted 79% of total deposits.