Bandhan Bank posts 13% decline in net profit at ₹633 cr

Bandhan Bank has registered a 13 per cent decline in net profit at ₹633 crore for the quarter ended December 31, 2020, against ₹731 crore in the same period last year on the back of higher provisioning.

During the quarter, the bank made further provisioning of ₹1,000 crore on standard advances against the potential impact of Covid-19. With this provisioning and additional standard assets provisioning that bank is carrying in the micro banking portfolio, total additional provisioning in books stands at ₹3,119 crore.

Net Interest Income (NII) for the quarter grew by around 35 per cent to ₹2,072 crore against ₹1,540 crore in the corresponding quarter of the previous year.

Non-interest income grew by 55 per cent to ₹553 crore compared to ₹358 crore in the corresponding quarter last year year. Operating profit increased by 51 per cent to ₹1,914 crore against ₹1,264 crore.

Net interest margin (annualised) for the quarter ending December 31, 2020, stood at 8.3 per cent against 7.9 per cent in December 31, 2019.

“This quarter showed robust performance operationally backed by higher growth, lower cost of funds and aided non-interest income and strong retail deposits and CASA. During the quarter, we further strengthened the balance sheet by taking accelerated additional provision on standard advances amounting to ₹1,000 crore taken for Covid-19. With Q4 historically been the best for us every financial year, we now look forward to similar performance in the last quarter for this financial year as well,” said Chandra Shekhar Ghosh, Managing Director and CEO of Bandhan Bank.

Gross non-performing asset as a percentage of advances stood at 1.11 per cent (1.93 per cent) and net NPAs stood at 0.26 per cent (0.81 per cent). The Supreme Court had, in its order in September, directed banks that the accounts that were not declared NPA till August 31, 2020, would not be declared non performing until further orders.

The bank’s proforma gross NPA would have been 7.12 per cent if it had classified borrower accounts as NPA after August 31, 2020, it said in notes to accounts to BSE.

According to Sunil Samdani, CFO, Bandhan Bank, while a lot of customers are making repayments, however, many are making part-payment of dues. So, it may not be right to consider these accounts as non-performing, as these are expected to regularise soon. The bank is focussing on improving recovery and enhancing collections.

Collection efficiency hit

The collection efficiency of the bank, which stood at around 89 per cent during the quarter ended September 2020, improved to around 92 per cent during the quarter ended December 2020. However, collections have been impacted, particularly in Assam, following the passing of the Assam Micro Finance Institutions (Regulation of Money Lending) Bill 2020, by the Assam Assembly and talks of a possible waiver ahead of the State elections.

Collection efficiency in Assam, which was at around 88 per cent in December-end, has come down to around 78 per cent during the first 16 days of January. Overall collection efficiency during the first fortnight of January has also inched down to around 90 per cent (against 92 per cent in end December).

The bank’s total exposure in Assam stood at ₹6,917 crore, which is about eight per cent of its total loan portfolio. The collection efficiency should improve moving forward, said Ghosh.

The bank’s scrip closed at ₹341.05, down by 5.22 per cent on the BSE on Thursday.