- Overall Advances Growth: 18.6% year on year, 7.7% quarter on quarter, totaling INR116,000 crores.
- EEB Portfolio Growth: 7.5% quarter on quarter, 10% year on year, with 6 lakh new borrowers added.
- Retail Loan Book Growth (excluding housing loans): 70% year on year, 15% quarter on quarter.
- Commercial Banking Growth: 60% year on year, 9% quarter on quarter.
- Housing Finance Book Growth: Over 6%, adjusted to 9% after selling INR720 crores of housing loan NPAs.
- Total Deposits: INR117,000 crores, 15% year on year growth.
- Retail Deposits Growth: 18% year on year.
- Retail Term Deposits Growth: 22% year on year.
- CASA Deposits: INR42,413 crores, 14% year on year growth, with a CASA ratio of 36.1%.
- Collection Efficiency: 99% excluding NPA.
- Gross NPA Ratio: Improved to 7% from 7.3% last quarter.
- Net NPA Ratio: 2.2%, down from 2.3% last quarter.
- Gross Slippage: INR1,390 crores, with INR600 crores in October.
- SMA-0 Book: Reduced to INR805 crores from INR963 crores last quarter.
- SMA-1 Book: Reduced to INR567 crores from INR609 crores last quarter.
- SMA-2 Book: Reduced to INR526 crores from INR688 crores last quarter.
- Net Profit: INR733 crores, 152% year on year growth.
- Net Interest Income: INR2,525 crores, 21% year on year growth.
- Net Interest Margin: 7.2%, up from 6.5% last year.
- Total Credit Cost: Stable at 2.5%.
- ROA: 1.9%.
- ROE: 14%.
- Branch Expansion: 26 new branches added, presence in 35 out of 36 states and Union territories.
- Digital Transactions: 95% of total transactions, 34% growth in digital registration, 36% growth in digital transaction volume, 39% growth in UPI transactions year on year.
Release Date: February 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bandhan Bank Ltd (BOM:541153, Financial) reported a net profit of INR 733 crores for Q3 FY24, a significant year-on-year growth of 152%.
- The bank's overall advances grew by 18.6% year-on-year and 7.7% quarter-on-quarter, reflecting strong demand across asset verticals.
- Retail loan book, excluding housing loans, grew by 70% year-on-year and 15% quarter-on-quarter, showcasing impressive growth in retail assets.
- CASA deposits showed a healthy growth of 14% year-on-year, with the CASA ratio standing at 36.1%.
- The bank's net interest margin improved to 7.2%, up from 6.5% in the same quarter last year, indicating better profitability.
Negative Points
- Gross NPA ratio remains high at 7%, although it has improved from 7.3% in the previous quarter.
- The bank experienced significant slippages in October due to CBS system migration and festival season, impacting asset quality.
- The SMA-0, SMA-1, and SMA-2 books, although improving, still represent a considerable portion of the bank's portfolio, indicating ongoing asset quality concerns.
- The bank's reliance on non-retail term deposits for funding growth could impact margins due to higher costs associated with wholesale deposits.
- The ongoing CGFMU audit and the associated stress book of INR 3,600 crores, with an 89% provision, remain a concern for the bank's financial health.
Q & A Highlights
Q: My first question is on the CGFMU audit. Is this a forensic audit like some media articles say, or just a normal detailed financial audit?
A: Our understanding is that forensics can be conducted by certain entities. NCGTC claims it's a forensic audit, which is published on their website. We are cooperating fully with the audit.
Q: In terms of the SMA pool, where do we see it settling? What would be the EEB slippage?
A: The slippage of EEB in this quarter is INR993 crores out of INR1,390 crores. We expect the low slippage seen in November and December to continue in the next few months.
Q: Now with the CBS migration done, could we expect some OpEx levels to come down?
A: We predict the OpEx to asset ratio to be around 3.5% to 3.7%. The third quarter has come to 3.6%. We expect it to continue in these lines.
Q: On margins, NIM was stable at 7.2% on a sequential basis despite strong growth due to cost pressures. Could we see NIM at the same level in the near term?
A: We predict NIM to be between 7% to 7.5% for this quarter. We will analyze further in our strategic meeting in March and communicate any changes.
Q: Some color on our portfolio in Punjab would be helpful. What would be our aim there, and what is the collection efficiency?
A: The Punjab portfolio is small, around INR714 crores out of a total book of INR58,000 crores. Collection efficiency details were not provided.
Q: How did the system migration affect slippage? Was it due to not having group meetings for a period of time?
A: On October 3, we migrated to the new system, declaring it a holiday. First few days had challenges in understanding the new system. Additionally, October had many holidays, affecting collections.
Q: Do we foresee any impact from the upcoming elections on disbursement or collection?
A: We have not seen any impact from the upcoming elections.
Q: What is the current share of secured to unsecured assets, and how do you plan to increase the secured share?
A: Currently, secured assets are 44.5%, and unsecured assets are 55.5%. We plan to focus on the affordable segment, expand into more geographies, and leverage digital lending to increase the secured share.
Q: What is the long-term guidance on ROA and ROE?
A: We predict ROE to be between 14% to 18% and ROA to be between 2.5% to 2.8%. We will finalize our long-term plan in our strategy meeting by the end of February.
Q: Can you share the average cost of your deposits?
A: The average cost of deposits is slightly over 5%, specifically 5.16%.
Q: What is driving the IBPC purchases in housing finance?
A: IBPC purchases are driven by opportunities to earn revenue from the portfolio. The yield on IBPC purchases is around 7.25%.
Q: What is the cost of bulk deposits raised during the quarter?
A: The cost of bulk deposits is slightly higher than 8%, around 8.1%.
Q: What is the recovery number in EEB for this quarter?
A: The recovery from EEB this quarter is INR178 crores, up from INR139 crores last quarter.
Q: Are we largely done with ARC sales in the near term?
A: We have not yet planned any further ARC sales. If we do, we will inform accordingly.
Q: What is the slippage from SMA-2 into EEB NPA this quarter?
A: We do not have the exact number handy and will get back with the details.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
