Private sector lender Bandhan Bank on Friday reported a 93.24 per cent year-on-year fall in its net profit to ₹54.62 crore for the fourth quarter last fiscal as the bank’s total provision doubled due to total technical write-off of ₹3,852 crore of bad loans, mostly microfinance, during the quarter.

The bank said the technical write-off was a “prudent and conservative” move to “strengthening” its portfolio. The lender further said it was a “very old portfolio” during the Covid times.

The Kolkata-based bank’s net profit stood at ₹808.29 crore during the fourth quarter of financial year 2022-23. During the fourth quarter last fiscal, the bank’s total provisions increased to ₹1,774.32 crore from ₹734.77 crore from the corresponding period previous fiscal.

“The microfinance business has faced severe headwinds during the pandemic and we faced issues with asset quality. We have over the last few years made provisions against the assets. We have reviewed our legacy portfolio and as a prudent measure, have done a technical write off during the quarter which resulted in lower profits for the quarter,” Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank, said during the bank’s earnings call with analysts and investors after the results announcement.

Ghosh, during a media conference, said the last quarter of FY24 was a “testament” to the momentum in business that the bank gained. “We have shown stability and growth across major parameters. The bank also strengthened its core leadership in the quarter,” he said.

During Q4FY24, the bank’s deposit book grew by 25 per cent year-on-year, while total loan book grew 14 per cent . Net interest income (NII) for the quarter grew 16 per cent y-o-y at ₹2,866 crore compared to ₹2,472 crore in Q4FY23. NIM for the quarter stood at 7.6 per cent.

The bank’s asset quality improved during the quarter under review with its non-performing assets (NPA), in absolute terms, coming down by 9.69 per cent y-o-y at ₹4,784.88 crore, according to a stock exchange filing. Gross NPA ratio during the quarter under review also fell 103 basis points y-o-y at 3.84 per cent compared with 4.87 per cent in Q4FY23.

Succession plan

The private sector lender is set to see a management transition after Ghosh decided to retire on July 9, after spending nearly a decade at the helm.

The outgoing MD said, “With the new appointments, we now have the full management team onboard and they bring in a wealth of experience and domain knowledge. I have the confidence that they would lead the bank in the next phase of growth which is Bandhan 2.0.”

On the succession plan, Ghosh, during the earnings call with analysts and investors, said, “A search committee has been formed and it has appointed headhunters.”

He said the ongoing audit initiated by the National Credit Guarantee Trustee Company (NCGTC) is in progress and expected to be completed shortly.

Ghosh also said that he is hopeful of a “positive result” of an ongoing audit initiated by the NCGTC on loan claims filed by the bank under a guarantee scheme.

“The audit is in progress and should be completed very shortly. Based on my interaction, I am confident and hopeful, we should get a positive result,” he added.