Private sector lender Bandhan Bank today reported a net profit of Rs 1,111 crore for fiscal 2017 and announced that the small business segment will be its area of focus in the coming times. The micro-lender, which turned into a universal bank in August 2015, had posted an annualised profit of Rs 500 crore in the year ago period.
However, Bandhan Bank Chairman and Managing Director C S Ghosh said the figures are not comparable. The legacy micro-finance segment accounts for 91 per cent of its total loan book of Rs 23,543 crore which grew 31 per cent in the year. The rest is in newer segments, including small businesses, loan against property, personal loans and housing loans.
“Our focus is to cater to the unbanked sections and we’ve decided to devote more attention to the Rs 1-10 lakh loans to small businesses and affordable housing,” Ghosh said. He, however, did not give any targets on this but maintained that the bank is aiming to grow both its deposits and advances by 30 per cent in fiscal 2018.
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Total advances included Rs 7,000 crore in loans sold to competition struggling to meet the priority sector lending mandates, he said. The receivables from such loans have given a 1.50 per cent boost to the net interest margin, he said.
Its net interest margin came in at a high 10 per cent, but Ghosh said normalising for the interbank participation certificate transactions and the money spent in distribution, it would be around Rs 500 crore. Turning into a bank has helped it reduce interest rates on micro-credit by 4 percentage points to over 18 per cent, he said.
Bandhan plans to increase its total network to 1,000 branches in fiscal 2018 from the present 840 and employees to 30,000 from the 24,000 at present. With the growth in business, it was able to bring down its cost to income ratio to 36 per cent from 56 per cent in the reporting year. It has been able to add 1.5 million customers through the branch network and the share of retail deposits stands at 79 per cent.
The share of the low cost current and saving accounts deposits rose to 29.43 per cent from 21 per cent. The net interest income rose to Rs 2,403 crore, while the non-interest income stood at Rs 411.41 crore.
Ghosh said there was no adverse impact of the note ban on the bank and the surge in bad assets to 0.38 per cent from 0.14 per cent was due to floods in the eastern state??? where it has a 65 per cent concentration. The bank is well-capitalised at 26.36 per cent with the core tier I at 24.77 per cent, he said.
Ghosh said the bank will adhere to the RBI-mandated plan of listing by August 2018, even though it has not yet made plans about it. The bank is also not keen to grow its network through any acquisition, he added.