Bandhan Bank rides on micro loans; posts 45% jump in profit at ₹701 cr

Riding on the back of a higher net interest income and a good growth in its microcredit portfolio, Bandhan Bank posted over 45 per cent growth in net profit at ₹701 crore for the quarter ended June 30, 2019 against ₹482 crore same period last year.

Micro loans account for nearly 86 per cent of the bank’s total advances, which stood at ₹45,420 crore during the quarter under review — registering a growth of over 39 per cent.

Net interest income grew by 36 per cent to ₹1,411 crore ( ₹1,037 crore). Other income grew by 48 per cent to ₹312 crore.

During the quarter under review, the bank received ₹370 crore from sale of Priority Sector Lending Certificates compared with ₹256 crore last year. Of this ₹370 crore, nearly ₹92 crore has been recognised in the profit and loss account during the quarter and the remaining amount of ₹277 crore will be recognised in the P&L account over the remaining three quarters, the bank said in the notes to accounts submitted to stock exchanges on Friday.

Net Interest Margin (NIM) for the June quarter stood at 10.45 per cent against 10.27 per cent in the corresponding quarter of the previous year.

The percentage of gross non-performing asset (GNPA) to total advances was higher at 2.02 per cent (1.26 per cent).

According to CS Ghosh, MD and CEO, the higher GNPA was due to single exposure to IL&FS, which defaulted in its debt obligations, and if the account was excluded, the GNPA would be around 1.11 per cent. The bank had made a provision of about ₹385 crore against IL&FS in September last year, he said. The net NPA stood at 0.56 per cent (0.64 per cent).

As on June 30, 2019, the bank’s capital adequacy ratio was 27.03 per cent (32.61 per cent).

Promoter holding

The bank had, in January this year, announced merger of Gruh Finance with it, which would bring down promoter holding to about 61 per cent from the current level of 82.3 per cent.

“The Gruh portfolio will help us balance the secured and unsecured lending book ad also help in widening the geographical spread of the bank, as about 70 per cent of Gruh’s operations are concentrated in Gujarat and Maharashtra, where we have a reasonable lesser reach,” Ghosh said.

It is also evaluating all other possible options to further bring down promoter holding in the bank.