Bandhan Bank reports maiden loss of Rs 3,000 cr as MFI loan stress shoots up

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Updated: October 29, 2021 7:04 PM

The collection efficiencies at an overall level climbed up to 94 per cent and will reach the pre-COVID level of 98.5 per cent by the end of the fiscal, Ghosh said, adding that difficult segments and markets like Assam have also posted an improvement.

The bank had posted a net profit of Rs 920 crore during the corresponding quarter of the previous fiscal.The bank had posted a net profit of Rs 920 crore during the corresponding quarter of the previous fiscal.

Private sector lender Bandhan Bank on Friday reported its maiden quarterly loss of Rs 3,009 crore for the July-September period, mainly due to higher provisioning for future loan losses in the microfinance book.

It had reported a Rs 920 crore profit for the same quarter a year ago.

The Kolkata-headquartered lender, which started out as a microfinance institution, said it is setting aside provisions as a prudential measure and pointed out that the collection efficiencies are increasing, which may also result in some of the money being written back.

The loss would have been much wider but for a Rs 1,020 crore tax write-back as against a payment of Rs 312 crore in the year-ago period.
The overall provisions came at Rs 5,577 crore for the quarter under review, as against Rs 379 crore in the year-ago period and Rs 1,442 crore in the preceding June quarter.

Its managing director and chief executive C S Ghosh said the bank decided to take the impact of the stress it sees as of now and asserted that it will not see any elevated provisions later.

The money set aside included Rs 2,100 crore as standard asset provisions and Rs 1,500 crore as accelerated provision on NPAs (non-performing assets), and the overall provisions now will cover 98 per cent of the gross NPAs.

The GNPA ratio moved up to 10.82 per cent at the end of the quarter from 1.18 per cent in the year-ago period and 8.18 per cent, on the back of fresh slippages of Rs 2,950 crore at a gross level.

The collection efficiencies at an overall level climbed up to 94 per cent and will reach the pre-COVID level of 98.5 per cent by the end of the fiscal, Ghosh said, adding that difficult segments and markets like Assam have also posted an improvement.

On the restructuring front, the bank is confident of managing its current set of accounts that have applied for the dispensation.

Ghosh said over 14,000 accounts have already been upgraded over the last month and underlined that the NPAs should not be seen as losses due to default.
The bank has also decided to decrease the overall reliance on the microfinance book, which is resulting in the maximum NPAs, to 50 per cent by the end of the fiscal from the present 57 per cent, Ghosh said.

In order to achieve this, it will be concentrating more on the upcoming streams like loans to individual borrowers, who have grown from microlending, small business loans, gold loans and housing loans, he said.

For the reporting quarter, the core net interest income grew 6 per cent to Rs 2,430 crore on a 7 per cent loan growth and the net interest margin was 7.60 per cent.

The other income came at Rs 491 crore from Rs 366 crore in the year-ago period and Rs 600 crore in the preceding quarter.
Its capital adequacy levels declined to 20.4 per cent from the 25.7 per cent a year ago.

The bank scrip declined 2.36 per cent to Rs 291.50 apiece on the BSE, as against a 1.13 per cent correction on the benchmark.

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