Bandhan Bank Q1 Results: Net Profit Falls 32% On Higher Provisioning
Bandhan Bank Ltd.'s quarterly profit fell on higher provisions in anticipation of a rise in borrower stress.
Net profit fell 32% year-on-year to Rs 373 crore in the quarter ended June, it said in an exchange filing. Analysts polled by Bloomberg had estimated the metric at Rs 275 crore.
The Kolkata-based lender's net interest income, or core income, rose 16.7% to Rs 1,811 crore compared with the Rs 1,977-crore forecast.
The bank’s gross non-performing asset ratio rose to 8.2% in the quarter ended June, from 6.8% as on March. Net NPA fell marginally to 3.3% from 3.5% in the preceding quarter.
Provisions rose sharply by 62% year-on-year to Rs 1,375 crore, on account of accelerated provisions—or set aside more money than required by the regulator if borrower stress is expected to increase—worth Rs 751 crore, resulting in a provision coverage ratio of 62% in the quarter ended June, compared with 50% in the preceding quarter. The bank reported no write-offs during the June quarter.
Bandhan Bank's overall collection efficiency stood at 101% as of June 30, while collections within its emerging entrepreneurs business, or micro business lending, stood at 98%. The bank's collection efficiency, including NPA accounts, stood at 81% for the EEB vertical during the quarter ended June.
The improvement in collection efficiency, according to Chandra Shekhar Ghosh, managing director and chief executive at Bandhan Bank, was due to better collections of monthly installments from customers tagged as non-performing and those who went for restructuring.
"About 74% of our NPA customers have been paying in the last quarter," said Ghosh.
But the bank continued to face lower collections from two of its key geographies—Assam and West Bengal, which comprised 57% of its micro-banking portfolio. While collection efficiency in West Bengal stood at 85% as on June, it was 67% in Assam.
Loans And Deposits
Total advances rose 8.1% year-on-year to Rs 80,357 crore, which included microfinance loans worth Rs 78,560 crore. The microfinance loans included Rs 58,350-crore worth business loans and individual loans amounting to Rs 20,210 crore.
"As per our plan, we are graduating the group loan customer to individual loans who have high potential and good enterprise demand," Ghosh said.
Bandhan Bank plans to pare its microfinance book to 30% by 2025, Ghosh said. "The bank is diversifying geographically and product-wise, so that it helps us balance secured and unsecured portfolio for growing in the future."
Deposits rose 27.6% from a year ago to Rs 77,335.5 crore. Current account savings account deposits constituted about 43% of total deposits, against 43.4% a year ago. Retail deposits constituted 82.6% of total deposits.
"Typically, second half of the financial year is always better for the bank in terms of growth and collections," Ghosh said. "With easing of Covid-19 second wave and upcoming festive season, we're confident of achieving better performance going forward."