Bandhan Bank is expecting 20 per cent growth in credit during the current financial year, backed by a steady pick-up in demand and an improvement in asset quality. The bank is planning to focus on geographical diversification by setting up more branches in the west, south, north and central India to grow its business moving forward.

The bank’s expansion plans had to be largely curtailed due to the Covid-induced lockdowns during the last two years and even before that due to the regulatory restrictions imposed by the Reserve Bank of India due to its failure to comply with licensing norms.

According to Chandra Shekhar Ghosh, MD and CEO, Bandhan Bank, the bank will now focus on branch expansion and geographical diversification as a strategy for risk mitigation and to establish itself as a universal bank.

“We are looking to open around 530 branches during the current financial year. We have a total of 5,640 banking outlets, including 1190 bank branches, at present, and nearly 47 per cent of them are in the eastern region. We are looking to diversify our concentration,” Ghosh told media on the sidelines of a press conference to announce the bank’s quarterly performance here on Friday.

Credit growth will be driven primarily by retail, housing, and MSME sectors during the current year. Microcredit currently accounts for nearly 45 per cent of its total loan book, which stands at ₹96,650 crore as on June 30, 2022, while the remaining 55 per cent comes from non-microcredit advances, including housing and other retail products and MSME.

“In housing, we have had close to 27 per cent growth on a year-on-year basis as both the volumes and average ticket size of advances have grown. We plan to further strengthen the housing loan business,” he said.

Q1 performance

Bandhan Bank has registered a nearly 138 per cent growth in net profit at ₹886 crore for the quarter ended June 30, 2022, as against ₹373 crore for the same period last year. However, according to Ghosh, it would not be right to compare the profits on a year-to-year basis since the overall demand and collections were subdued during the first quarter of FY22 on account of the second wave of the pandemic.

Sequentially, net profit was down by nearly 53 per cent from ₹1,902 crore during the quarter ended March 31, 2022.

“With asset quality and credit costs stabilising, our focus in FY23 will be to grow our balance sheet and focus on product and geographic diversification as per the bank’s strategy,” he said.

Non performing assets

The percentage of gross non-performing assets to advances improved to 7.25 per cent during the quarter under review as compared with 8.18 per cent in the same period last year. Net NPA also improved to 1.92 per cent (3.29 per cent).

Gross slippages during the quarter came down on a sequential basis to ₹1,125 crore as compared with ₹1,365 crore during the quarter ended March 31, 2022. The bank’s total restructured loan book, which was at ̥₹7,547 crore last year, has come down to ₹4,661 crore due to improved collections and recovery. The bank does not expect any incremental provisioning on account of the restructured loan book moving forward.

Ghosh said the overall collection efficiency of the bank stands at 96 per cent and is expected to improve to close to 98 percent by the end of the current financial year.

Related Topics
comment COMMENT NOW