Bandhan Bank net up 20.3% despite rise in gross NPAs

Microlender-turned commercial bank Bandhan Bank today posted a 20.3% growth in the March quarter net at Rs.388 crore, but reported a fourfold spike in bad loans in its core microlending portfolio.

For the entire fiscal year 2018, the Kolkata-based bank, which went public last month, reported a 21% growth in bottomline at Rs.1,346 crore.

The bank said the overhang of the triple blows of note-ban, GST introduction and farm loan waiver is still visible in the micro-lending segment which constitutes as much as 72% of its assets.

As against a historical average of about 0.4%, its gross non-performing assets ratio more than trebled to 1.25% during the quarter.

Managing director and chief executive Chandra Shekhar Ghosh said thtat stress continues in the microlending segment, but pointed out that there has been a declining trend in the same, which is visible from gross bad loan ratio of 1.67% in the December quarter.

The bank had to write off Rs.51 crore of advances in FY18 because of the stress, he added. Provisions shot up nearly threefold to Rs.109.08 crore from Rs.36.44 crore in the year-ago period.

The core net interest income grew 25.2% to Rs.863 crore in the reporting quarter, while non-interest income, earned primarily through distribution of financial products like mutual funds, soared 57.4% to Rs.203 crore.

The bank registered a 37.4% growth in advances and 45.8% spike in deposits. Net interest margin improved to 9.3% from 10.7%, as non-MFI book grew to 28%.

Chief financial officer Sunil Samdani said 95% of overall advances classify as priority sector lending and the manner in which they were monetised also had a bearing on the margins.

He said 90% of such “downselling” in FY18 was through the priority sector lending certificate route which bloats the fees but trims the margin.

Ghosh, however, didn’t offer a NIM target. He said in FY19, it is targeting to “minimise” the bad loans ratio and relying more on tracking the daily on-time payment data to achieve the goal and deploying more field force.

It plans to increase the overall presence to 4,000 from 3,700 now, which will see addition of nearly 60 branches to take the number to 1,000 and nearly 300 doorstep service centres to 3,000.

The bank scrip closed 2.04% higher at Rs.504.90 on the BSE as against 0.74% rally on the benchmark.