Bandhan’s profit numbers were poorer than what analysts expected earlier. This was despite lower provisions during the quarter at Rs 602 crore against Rs 642 crore in the year-ago period, which helped credit cost to fall 30 basis points to 2.4%.
Net interest margin at 7.3% was 70 basis points lower than what it was a year back. Net interest income was at Rs 2,491 crore, largely on account of highest interest expenses.
The bank’s operating profit, too, fell 14% year-on-year at Rs 1,562 crore. Operating expenses rose 28.3% at Rs 1,310 crore.
Managing director Chandra Shekhar Ghosh attributed the rise in opex to expansion of its branch network and investment on IT and human resources.
“Our investment in people, technology, IT and expansion over the last few quarters will surely improve the performance of the bank,” Ghosh said.
The private sector lender added nearly 700,000 customers in the March quarter to take the tally to 30.7 million. Number of banking outlets rose to 6,140 including 1,542 branches.Bandhan’s gross non-performing assets ratio, although improved to 6.76% at the end of June from 7.25% a year back, deteriorated when compared to the situation three months back. Gross NPA was 4.9% at the end of December 2022.
“This was due to a recent change in asset classification norm,” chief financial officer Sunil Samdani said.
The lender also saw higher slippages at Rs 13,600 crore during the quarter under review as compared with Rs 11,300 crore in the year-ago period. Out of this, Rs 900 crore was on account of microfinance and the balance is from small and medium-sized business loans.
“The rise in interest rates led to some stress and default,” Ghosh said.
The bank saw a muted 6.7% year-on-year loan growth to Rs 1.03 lakh crore while deposits grew 16.6% to Rs 1.08 lakh crore.
The loan growth was largely on account of retail loan expansion, which grew 87% while the microfinance book shrank to Rs 51,000 crore from Rs 57,000 crore a year back.
Ghosh, however, expects to clock around 20% loan growth during FY24, riding on festive loan demand from both microfinance and retail borrowers.