Dragged down by higher provisioning, Bandhan Bank reported a near 5 per cent drop in net profit at ₹920 crore for the quarter ended September 30, 2020, against ₹972 crore in the same period last year.
Total provisioning increased by nearly 171 per cent at ₹395 crore during the quarter under review when compared to ₹146 crore during the year-ago period.
During the quarter, the bank has taken accelerated additional provision on standard advances amounting to ₹300 crore. With this provision and additional standard assets provision that the bank is carrying in the micro banking portfolio, total additional provision in books stands at ₹2,096 crore, the bank said in a press statement.
However, the bank does not expect any major requirement for provisioning on advances against the potential impact of Covid-19, moving forward.
According to Chandra Shekhar Ghosh, Managing Director and CEO, Bandhan Bank, disbursements have started picking up during the festival season, and the trend should continue, moving forward, given signs of improvement in economic activity.
“The rural economy is doing well, the monsoons have been good and the crop is also expected to be better. The government has also announced several measures to support the economy. We have also witnessed a good pick up in business during the Pujas,” said Ghosh at a virtual press conference while announcing the company’s performance during the second quarter.
Collection efficiency improves
The bank’s collection efficiency has been improving on a month-on-month basis and should be back to “normal” by January end. While the overall collection efficiency of the bank improved to 92 per cent in September, its micro banking book had a collection efficiency of 89 per cent. In October, the repayments and collections under micro banking portfolio has improved further to around 91 per cent.
“We expect to reach a collection efficiency of 98-98.5 per cent in the next 90 days period,” he said.
Microcredit accounts for nearly 65 per cent of the bank’s total advances, which stood at around ₹76,614 crore as on September 2020.
During the quarter under review, the bank’s gross NPA (non-performing asset) as a percentage to total advances came down to 1.18 per cent (1.76 per cent) while net NPA declined to 0.36 per cent (0.56 per cent).
“As the moratorium ended on August 31, 2020, coupled with robust rural performance, we have seen an all-round improvement in collection, disbursement and deposits. We now look forward to accelerate the business in H2 FY21,” he said.
Total deposits increased by nearly 34 per cent to ₹66,127 crore as on September 30, 2020, when compared to ₹49,195 crore as on September 2019.
NIM to improve
While the bank had a robust growth in deposits, however, the growth in advances was a little subdued, thereby exerting pressure on margins, which declined to 8 per cent when compared to 8.2 per cent in the corresponding quarter last year.
However, with disbursements expected to start picking up, the bank expects to be able to maintain the net interest margin (NIM) at around 8.2 per cent moving forward.
The net interest income increased by nearly 26 per cent to ₹1,924 crore (₹1,529 crore) and other income grew by 6 per cent to ₹382 crore (₹360 crore).
Bandhan Bank, which has added around 142 branches so far this fiscal, is looking to add another 574 branches by the end of this fiscal. These branches would be added primarily in the south, west and northern parts of the country.
The bank’s scrip closed at ₹300.85, up by 4.01 per cent on the BSE on Monday.