Bandhan Bank’s net profit for the quarter ended June grew 34.9% on year to Rs 502 crore despite a muted rise in the net interest income. Sequentially however, the bottom line declined 6%.
Net interest income (NII) was up merely 6% to Rs 2,621 crore. The net interest margin was stable on a quarter-on-quarter basis at 6.20%. The management said it would aim to maintain the net interest margin (NIM) at above 6%.
Other income declined around 17% on year and 22% on quarter to Rs 604 crore. Operating expenses rose 19% year-on-year to Rs 2,166 crore, driven by continued investments in technology. Consequently, the cost-to-income ratio increased to 61.5% from 59.6% in the preceding quarter.
According to the management, the ratio is likely to remain elevated over the next year as technology investments continue, before improving as business growth helps absorb these costs and generates operating leverage.
The bank saw a loan growth of 16.4% on year and a deposit growth of 6.6%, taking the credit-deposit ratio to around 95% as on June 30. Within overall loan growth, wholesale banking was up 38.4% and retail assets rose 45%.
The slower growth in deposits was due to the strategic decision to reduce bulk deposits for improving the quality of the deposit franchise and reduce the cost of funds. “We have decreased our bulk deposit by almost Rs 7,000 crore, which is around 12.7%. Retail deposits have increased by 16%,” the management said.
The share of current account and savings account (CASA) deposits to total deposits stood at 29.4% as compared to 29.3% a quarter ago. The bank has so far garnered $3.12 million in FCNR(B) deposits.
The provisions and contingencies for the quarter declined 41% on year to Rs 683 crore, with the provision coverage ratio at 71.1%.
The gross non-performing asset (GNPA) ratio stood at 3.1%, down 12 basis points (bps) on quarter, while the net NPA ratio stood at 0.9%, down 4 bps from a quarter ago.
On Tuesday, shares of Bandhan Bank closed 1.3% lower at Rs 208.60 on BSE. The earnings were announced post market hours.
