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Bandhan Bank posts whopping Rs 3,009-crore loss in Q2 as bad loans surge

Net interest income (NII) for the quarter stood at Rs 1,935.41 crore, against Rs 1,923.09 crore in the year-ago period. Net interest margin (NIM) stood at 7.6%, down 4 bps from 8% for Q2FY21.

Bandhan Bank posts whopping Rs 3,009-crore loss in Q2 as bad loans surge
During the period under review, the bank made an accelerated provision on NPA accounts of around Rs 1,500 crore. It also provided an additional standard assets provision amounting to Rs 2,100 crore and provision on restructured assets amounting to Rs 1,030 crore.

Private sector lender Bandhan Bank on Friday reported a whopping net loss of Rs 3,008.59 crore for the second quarter this fiscal, on the back of Rs 5,577.92-crore provisions as the lender saw a huge surge in bad loans.

In absolute terms, non-performing assets (NPAs) of the bank, which had posted a net profit of Rs 920 crore in the second quarter last fiscal, soared 10-fold year-on-year to Rs 8,763.60 crore in the second quarter this fiscal from Rs 873.97 crore in the year-ago period. On a quarter-on-quarter basis, NPAs grew 36% from Rs 6,440.38 crore in the first quarter.

During the period under review, the bank made an accelerated provision on NPA accounts of around Rs 1,500 crore. It also provided an additional standard assets provision amounting to Rs 2,100 crore and provision on restructured assets amounting to Rs 1,030 crore.

Addressing a virtual press meet, Bandhan Bank MD & CEO Chandra Shekhar Ghosh said, “It was a very critical quarter. But not just for us, everyone is undergoing the same. We recognised this reality and strengthen our balance sheet to be prepared for the future business. All stresses are assessed and finalised in this moment. And then, the bank made a one-time additional provision. This quarter total provisioning was Rs 5,578 crore. Due to such provisioning, the bank has reported a loss of around Rs 3,000 crore in this quarter…it is not a loss, it is like taking some break comfortably, so that from today, we can only focus on business growth and quality of the portfolio.”

Ghosh said the bank believed that this provisioning should be “sufficient” to take care of any previous asset quality issues on account of the ongoing pandemic as well as protect it against the disruptions caused by any potential third wave.

During the second quarter this fiscal, the bank’s gross NPAs as a percentage of total loans increased 964 basis points on year-on-year basis to 10.82% from 1.18% during the same quarter last fiscal. On a quarter-on-quarter basis, the gross NPA ratio soared 264 bps from 8.18% in Q1FY22.

Net interest income (NII) for the quarter stood at Rs 1,935.41 crore, against Rs 1,923.09 crore in the year-ago period. Net interest margin (NIM) stood at 7.6%, down 4 bps from 8% for Q2FY21.

Ghosh informed that collection efficiencies improved in the September quarter and credit growth came back to nearly the pre-Covid situation. Growth in loan and advances for the bank in this quarter was 7%.

“For the EEB segment (erstwhile microbanking segment), collection efficiency was 83% in June, and now it is 129%, which is a very strong message to the bank from the customers on how they are coming back to the pre-pandemic situation. In the EEB segment, around 9% of our customers had not paid any instalment in June, while in September this number was only 4%. Now, around 79% of our customers are paying full instalments, while the number was 62% in June. September onward, it will gradually improve. We hope that in the future it will be better for the bank. We remain hopeful that if things continue to improve in the country from here now, we would reach our pre-Covid efficiency in the next couple of quarters,” Ghosh added.

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