Bandhan Bank Q3 Results: Profit Misses Estimates, Asset Quality Weakens
Bandhan Bank’s Q3 profit missed estimates as it made additional provisions against its microfinance portfolio in protest-hit Assam
Bandhan Bank Ltd.’s third-quarter profit missed estimates as it made additional provisions against its microfinance portfolio in protest-hit Assam.
Net profit stood at Rs 731 crore in the quarter ended December, according to the microlender-turned-commercial bank’s exchange filing. That’s lower than the Bloomberg consensus estimate of Rs 805 crore.
The figures are not comparable sequentially or with same period a year ago as the Kolkata-based lender’s merger with Gruh Finance came into effect from October.
Net interest income, or the core income of the bank, stood at Rs 1,540.3 crore, missing the estimated Rs 1,619 crore.
The private lender’s asset quality weakened. Gross bad loans rose to 1.93 percent compared with 1.76 percent in the previous quarter. Net non-performing assets also deteriorated sequentially to 0.81 percent from 0.56 percent.
Provisions against bad loans stood at Rs 294.9 crore in the October-December. The lender made an additional provision of Rs 200 crore on standard advances in the micro-finance portfolio after evaluating risk observed in certain areas of a northeastern state, referring to the protests against the new citizenship law in Assam.
The unrest in the Northeast has an impact on the banks micro credit portfolio, but it is not exceptional. This is why we made extra provision of Rs 200 crore. But this type of incident maximum lasts for one or two months.Chandra Shekhar Ghosh, Managing Director and CEO, Bandhan Bank
Bandhan Bank Q3 Results: Other Highlights
- Total portfolio from Assam stands at Rs 6,500 crore or 16 percent of the microfinance portfolio or 10 percent of the entire loan portfolio.
- CASA ratio at 34.31 percent of total deposit (excluding Gruh deposits at 35 percent).
Shares of the Bandhan Bank fell as much as 3.1 percent after the earnings compared with a 0.1 percent gain in the Nifty Index. The bank’s shares rose 13 percent in the past one year compared with a 15 percent gain in the Nifty Private Bank Index.