Bandhan Bank net up 20.3% despite microfinance NPA trebles

Mumbai: Microlender-turned commercial bank Bandhan Bank on Friday posted a 20.3 percent growth in March quarter net at Rs 388 crore, but reported a fourfold spike in bad loans in its core micro-lending portfolio.

For the entire fiscal year 2018, the Kolkata-based bank, which went public last month, reported a 21 percent 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 segmentm which constitutes as mnuch as 72 percent of its assets.

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

Managing director and chief executive Chandra Shekhar Ghosh said 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 percent 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 percent 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 percent to Rs 203 crore.

The bank registered a 37.4 percent growth in advances and 45.8 percent spike in deposits.

Net interest margin improved to 9.3 percent from 10.7 percent, as non-MFI book grew to 28 percent.

Chief financial officer Sunil Samdani said 95 percent 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 percent 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 percent higher at Rs 504.90 on the BSE as against 0.74 percent rally on the benchmark.