Bandhan Bank Q1 net falls 32% on higher provisioning

In Q4FY21, gross slippages were around Rs 3500 crore.

Private sector lender Bandhan Bank on Friday reported a 32.14% year-on-year (y-o-y) fall in net profit to Rs 373.08 crore in the first quarter of the current fiscal year on the back of additional provisions on non-performing assets (NPAs) and accelerated provisions on standard assets for potential impact of Covid-19.

During the first quarter of FY22, the lender made additional provisions on NPA amounting to Rs 750.83 crore for potential impact of Covid 19 on certain loan portfolios, while holding accelerated provisions of Rs 322.66 crore on standard assets as on June 30.   The Kolkata-based bank had posted a Rs 549.82-crore net profit in the first quarter of 2020-21, while in the fourth quarter of 2020-21 the net profit was Rs 103.03 crore.

The total provision and contingencies during the quarter under review rose 61.93% YoY to Rs 1374 crore from Rs 849.06 crore in the same quarter previous fiscal year. Gross NPAs as a percentage of total loans increased 137 basis points quarter on quarter to 8.18% from 6.81% during the fourth quarter of the last fiscal. In Q1FY22, net NPA ratio, however, fell 22 basis points QoQ to 3.29% from 3.51% in Q4FY21.

Commenting on the performance, Chandra Shekhar Ghosh, MD and CEO of Bandhan Bank, said, “In spite of challenging environment due to Covid second wave, we have delivered the best-ever quarter in terms of operational performances. Collections continue to improve with Covid restrictions getting relaxed.”

During Q1FY22, the bank’s loan portfolio grew 8.1% YoY, while its EEB (erstwhile micro-banking segment) portfolio grew 12% YoY. Total collection efficiency for the EEB portfolio during the June quarter stood at 98%. Net interest income (NII) for the quarter grew 16.70% YoY to Rs 2,114.08 crore, against Rs 1,811.53 crore in the corresponding quarter of the previous year. Net interest margin (NIM) stood at 8.5%, up 35 bps from 8.15% for Q1FY21.

Ghosh said during Q1FY22, around Rs 4,661 crore of loans were restructured, while gross slippages stood at Rs 1,661 crore.

In Q4FY21, gross slippages were around Rs 3500 crore.

“EEB is 60% of our business and that is unsecured. And, situation was such that with Covid in the last quarter doorstep collections were not possible in many parts. So, slippages have been higher in this business,” said Sunil Samdani, CFO, Bandhan Bank. In terms of overall collection efficiency, the bank said July was better than June.

“Our growth situation is intact,” Ghosh said, adding the bank was focussing on transformation and diversification of its balance sheet for greater secure-unsecure loans balance.