Bandhan Bank Q4 net profit slides to Rs 55 cr on high loan write-offs, asset quality healthy

The net interest margin (NIM) for the quarter was 7.6 percent for the full year versus 7.3 percent last year.

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Private sector lender Bandhan Bank on April 17 reported a net profit of Rs 55 crore compared to Rs 810 crore last year. This was largely due to high loan write offs of Rs 3,852 crore done by the bank in the quarter.

“During the quarter, as a prudent measure and in accordance with its policy, the bank has technically written off loans amounting to Rs 3,852 crore,” Bandhan Bank said. The provisions charged to the profit and loss for the quarter were at Rs 1,774 crore.

Net interest income (NII) of the lender stood at Rs 2,866 crore compared to Rs 2,472 crore last year, growing by 16 percent. The net interest margin (NIM) for the quarter was 7.6 percent for the full year versus 7.3 percent last year.

The bank's gross non-performing assets (NPA) stood at 3.8 percent versus 4.9 percent last year. And the net NPA of the bank stood at 1.1 percent compared to 1.2 percent. Provision Coverage Ratio as of March 31, 2024, is 71.8 percent. Chandra Shekhar Ghosh, Managing director and chief executive officer (MD and CEO), in the post results analyst call, said that the bank expects to see positive traction in asset quality with high focus on recovery.

The bank’s net revenue for the quarter was at Rs 3,560 crore compared to Rs 3,101 crore in last year. The bank proposed a dividend of Rs 1.50 per share.

Deposits grew 25 percent and stood at Rs 1.35 lakh crore and advances grew 14.5 percent in FY24 and stood at Rs 1.25 lakh crore as of end-March 2024.

The cost-to-income ratio for the quarter was 48 percent. However, adjusting for the impact of one-offs, cost to income ratio stands at 45 percent.

Shares of the lender closed for trading on May 17 at Rs 181.20, 0.86 percent up.

Update on NCGTC audit

The bank, Ghosh said, is expecting the National Credit Guarantee Trust Company (NCGTC) audit of its claims under the Credit Guarantee Fund for Micro Units (CGFMU) and Emergency Credit Line Guarantee Scheme (ECLGS) to be completed soon, said Chandra Shekhar Ghosh, managing director and chief executive officer (MD and CEO). “We expect the CGFMU audit to be completed soon. As per the communication, we are expecting a positive response,” Ghosh said.

This comes after the bank had taken insurance of the portfolio of Rs 20,800 crores under the CGFMU scheme and disbursed over Rs 1,950 crore under the ECLGS in FY 2020-21. The NCGTC has flagged that the loans were either evergreen or that Bandhan Bank created fictitious accounts to obtain the maximum guarantee cover.