Private sector lender Bandhan Bank on Friday reported a net profit of Rs 388 crore in the quarter ended March, up 20.3% from the corresponding figure in the same quarter last year, on the back of a 25.3% year-on-year (y-o-y) rise in net interest income (NII) to Rs 863 crore.
NII is the difference between interest earned and interest paid by the bank.
Net interest margin (NIM) fell to 9.3% from 9.6% at the end of December and from 10.7% at the end of March 2017, as the bank diversified into loan products other than its high-yielding legacy micro-credit book.
The bank’s provisions rose 199.3% y-o-y to Rs 109 crore. Management attributed the jump in provisions to the lingering effects of demonetisation, farm-loan waivers announced by some states, the roll-out of the Goods and Services Tax (GST) and the bank’s own provisioning norms. Bandhan provides 1% against micro-credit loans, while the regulatory requirement is 0.25%.
Asset quality at the bank improved from the previous quarter, with the gross non-performing asset (NPA) ratio falling to 1.25% from 1.67% and the net NPA ratio dropping 22 basis points (bps) to 0.58%.
Total advances as on March 31 stood at Rs 32,339 crore, up 37.4% from the previous year, while total deposits rose 46% y-o-y to Rs 33,869 lakh crore. The current accounts savings accounts (CASA) ratio improved to 34.3% from 29.4% at the end of March 2017.
Chandra Shekhar Ghosh, managing director and chief executive officer, Bandhan Bank, said micro-credit now accounts for 86% of the bank’s loan book, as against 91% a year ago. Small entrepreneur loans (SELs), ranging between Rs 1 lakh and Rs 10 lakh each, stood at Rs 1,639 crore, SME loans at Rs 1,641 crore and retail loans at Rs 1,409 crore.
For deposits, the bank is looking beyond its core microfinance customer base. “Seventy-two percent of our deposits are retail deposits of less than Rs 1 crore,” Ghosh said, adding, “We are not focusing on our micro-credit borrowers for deposits. While we have some of them saving with us, we are not targeting that.” Seven percent of Bandhan Bank’s deposits are from its micro-credit outlets.