Bandhan Bank Q4 net soars 68%, asset quality improves

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Private sector lender Bandhan Bank on Thursday reported a 67.8% growth in its net profit at `651 crore for the March quarter because of higher net interest and non-interest income, coupled with an improved asset quality.
The microlender-turned-commercial bank had reported a net profit of `388 crore in Q4FY18.
Total income rose by 54.2% y-o-y to `1,646 crore on account of a 45% rise in its NII to `3,048 crore and a 91% rise in its non-interest income like fees and commission to `388 crore. NII is the difference between interest earned and interest paid by a bank.

The lender’s pre-provisioning profit grew by 64% to `1,154 crore on the back of a growing total income. The net interest margin (NIM) rose by 137 basis points (bps) y-o-y to 10.69%. However, provisions grew by 41.2% to `154 crore as the lender made 100% provision to an exposure of `385 crore to IL&FS.
The bank, whose promoters were struggling to bring down the holding in the bank in accordance with the Reserve Bank of India norms, will go for an offer for sale to reduce the holding, managing director Chandra Shekhar Ghosh said.

He also said an acquisition, which can serve as an alternative to reduce promoter holding, is off the table for the time being. However, Ghosh did not share a timeline by when he expects the sale process will be completed.
It can be noted that the promoters were unable to bring down their holdings to RBI’s insistence of 40% last year, which resulted in restrictions on branch expansion. Later, it merged with small mortgages focused Gruh Finance, helping it lower the stake by over 20% to 61%.

For the reporting quarter, core net interest income grew 45% on a 38% loan growth and expansion of margins to 10.69% as against 9.32%.

The asset quality improved, with gross non-performing assets (NPAs) falling by 37 bps quarter-on-quarter to 2.04% of the loan book. Net NPAs fell 12 bps sequentially at 0.58%.

“The customer repayment rate which has amounted to 99.3% has helped us keep our NPAs down,” said Ghosh. “In the past two years, we have faced issues regarding NPAs, but now I have confidence that we will continue this performance in the future,” he added.

The capital adequacy ratio (CAR) under basel-III norms was at 29.2%. The minimum CAR under basel-III is 10.5%.
Total deposits grew by 27.64% year-on-year to `43,232 crore for the quarter, compared with `33,869 crore in Q4FY18. Advances grew 38.46% to `44,776 crore for the quarter, against `32,339 crore in the same period a year ago. The current account savings account (CASA) ratio as on Q4FY19 stood at 52.5%.

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