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Private sector lender Bandhan Bank posted a 68 per cent increase in net profit in the fourth quarter of 2018-19, and also announced the likelihood of an offer-for-sale (OFS) to meet promoter shareholding norms of the Reserve Bank of India.
The bank’s net profit rose 67.7 per cent to ₹650.87 crore for the quarter ended March 31, 2018, against ₹387.85 crore a year ago.
“We cannot go for any more acquisitions. The option is to have an offer-for-sale,” said Chandra Shekhar Ghosh, Managing Director and CEO, Bandhan Bank. He however, did not give a timeline for the OFS.
The RBI had, in September last year, barred the micro lender-turned-private bank from opening branches, and had also put a freeze on the pay of its MD and CEO after it failed to cut promoter stake to 40 per cent.
It then went for a merger with HDFC-led Gruh Finance in January this year, which helped lower the stake by over 20 per cent to 61 per cent.
The proposed merger is now awaiting approval from the NCLT and shareholders and creditors of the two entities. It has already received clearance from the Reserve Bank of India, Competition Commission of India, and SEBI.
Non-interest income
The bank’s robust performance in the January to March 2019 quarter was largely due to a sharp 43 per cent increase in its total income, especially non-interest income.
Net interest income for the quarter under review grew by 45.6 per cent at ₹1,258 crore, against ₹864 crore a year ago. Similarly, net interest margin for the fourth quarter of 2018-19 was 10.69 per cent, against 9.32 per cent a year ago.
Non-interest income shot up by 91.13 per cent to ₹388 crore for the quarter ended March 31, 2019, against ₹203 crore in the corresponding quarter of the previous year.
For the full fiscal 2018-19, Bandhan Bank registered a 45 per cent increase in net profit at ₹1,951.50 crore, compared to ₹1,345.55 crore in 2017-18.
Gross, net NPAs
Gross non-performing assets nearly doubled to 2.04 per cent of gross advances from 1.25 per cent in the year-ago period, which was attributed to the exposure to debt-ridden IL&FS.
Net NPAs, however, remained stable at 0.58 per cent of net advances. Bandhan Bank has an outstanding loan of ₹385 crore to IL&FS which has turned dud, while ₹25 crore given to a group company engaged in skill development is still standard.
Its provisions rose by 51 per cent to ₹153.27 crore from ₹109.08 crore in the fourth quarter of 2017-18. The bank has taken 100 per cent provision for the IL&FS exposure in the preceding quarter itself, said Ghosh, adding the bank is not looking at re-entering the large-ticket loans segment, having burnt its fingers with IL&FS.
On Thursday, the bank’s scrip gained 4.11 per cent to close at ₹622.60 apiece on the BSE.
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