- Gross Advances: INR124,724 crores, 14% YoY growth, 8% QoQ growth.
- Adjusted Advances Growth: 18% YoY, 11% QoQ (excluding technical write-off).
- Deposits: INR135,202 crores, 25% YoY growth, 15% QoQ growth.
- Retail Deposits Growth: 22% YoY.
- CASA Deposits: INR50,151 crores, 37.1% of total deposits.
- Collection Efficiency: 99% (excluding NPA portfolio).
- Gross Slippages: INR1,017 crores, down from INR1,394 crores in Q3 FY24.
- Technical Write-Off: INR3,852 crores in Q4 FY24.
- Provisions: INR1,774 crores in Q4 FY24.
- Gross NPA Ratio: 3.8%, down from 7% in Q3 FY24.
- Net NPA Ratio: 1.1%, down from 2.2% in Q3 FY24.
- Provision Coverage Ratio (PCR): 71.8% as of March 31, 2024.
- Net Interest Income (Q4 FY24): INR2,866 crores, 16% YoY growth.
- Net Interest Margin (Q4 FY24): 7.6%, up from 7.2% in Q3 FY24.
- Total Net Income (Q4 FY24): INR3,560 crores, 15% YoY growth.
- Operating Expenses Growth: 32% YoY (23% YoY excluding one-off expenses).
- Operating Profit (Q4 FY24): INR1,838 crores, 2.4% YoY growth.
- Net Profit (Q4 FY24): INR55 crores.
- Return on Assets (Q4 FY24): 0.1% (2.2% normalized).
- Return on Equity (Q4 FY24): 1% (17% normalized).
- Cost-to-Income Ratio: 48% (45% normalized).
- Net Interest Income (FY24): INR10,326 crores, 12% YoY growth.
- Net Interest Margin (FY24): 7.3%, up 10 basis points YoY.
- Profit After Tax (FY24): INR2,229 crores, 2% YoY growth (30% normalized).
- Liquidity Coverage Ratio: 172% as of March 31, 2024.
- Return on Assets (FY24): 1.4%.
- Return on Equity (FY24): 11%.
- Capital Adequacy Ratio: 18.3%, with Tier 1 capital at 17.2%.
- Dividend: INR1.50 per equity share for FY24.
- New Branches: 53 branches in the last quarter, 289 branches added in total.
Release Date: May 17, 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 robust quarter with a 14% year-on-year growth in gross advances, reaching INR124,724 crores.
- The bank saw a significant improvement in asset quality, with the gross NPA ratio improving to 3.8% from 7% in the previous quarter.
- Total deposits grew by 25% year-on-year to INR135,202 crores, reflecting strong customer trust.
- The bank's net interest margin improved to 7.6% in Q4 FY24, up from 7.2% in the previous quarter.
- Bandhan Bank Ltd (BOM:541153) has a strong network base with 6,300 banking outlets and a customer base of over 3.35 crores.
Negative Points
- The bank's profitability was impacted by a technical write-off of INR3,852 crores, resulting in lower profits for the quarter.
- Operational expenses increased by 32% year-on-year, partly due to one-off expenses related to core banking implementation and other factors.
- Despite improvements, the bank's slippages in the EEB book remain a concern, with INR625 crores in slippages reported in Q4 FY24.
- The bank's cost-to-income ratio remains high at 48%, although it is expected to improve gradually over the next few years.
- The ongoing audit of the CGFMU portfolio adds an element of uncertainty, although management is confident of a positive outcome.
Q & A Highlights
Q: My first question is on the technical write-off. So basically, there is a notes to account which mentions a technical write-off of CGFMU as well. So of the total write-offs, how much was CGFMU and likewise, for the provision? You separated the BAU credit cost of 2.3% from the remaining. And so how much of it was at all, if any, a portion to the CGFMU? And my second question relates again to the audit only that or the technical write-offs. So what really drove the overall technical write-offs as in that it was just a prudent measure or it was a regulatory notch given a lot of discussions, our unsecured loans in the sector as a whole. So which of the two was the overriding objective of doing write-off? And my third question is on slippage. So if you see -- if you try to compare the current quarter slippage with the SMA data of the previous quarter then the slippage is usually much higher than SMA 2 and it maybe 70%, 80% of SMA 1 plus 2. So how do you think of -- how should we use slippages in the context of the SMA disclosures going ahead? That's my third question.
A: First, I will like to start, and then CFO will add further. The first point on that the total of our portfolio, which is the write-off, it not specifically the CGFMU one. If I say that the up to this is a majorly is coming from micro credit. And micro credit, there is up to '22 financial year. That's mean, '19-'20, '20-'21, and '21-'22, we have at INR4,601 crores the portfolio, and we have that of the INR4,557 crores is NPA. We are very old portfolio. Out of that, we have been INR3,852 crores have been written off. So this is the way we are thinking about in that very -- because of this very old portfolio. Of course, some amount will be back to CGFMU. We have not considered as an CGFMU portfolio on that. It is a total portfolio, whatever the oldest we are written off in this quarter -- next quarter. Rajeev here. So just to answer the three questions that you've asked for. I think MD sir has already talked about the context. If we look at the total technical write-off that was done during the quarter of INR3,852 crores. The CGFMU portfolio within that was INR3,053 crores and remaining was about INR800 crores. The way the bank has actually gone about this is to look at on a prudent basis, on a conservative basis, shore up our provisioning as well as ensure portfolio quality improves. And therefore, this step has been done. The review has been done by taking a consideration of the entire portfolio within the EEB book, which is over particular vintage. And therefore, we have looked at the book, which was pertaining to years FY 2021 and thereabout and looking at what exactly has been the trend of recoveries and therefore, a review has been done in terms of taking a technical write-off. Now naturally, when we look at that, a portion of the book will include the CGFMU, which I had mentioned. But we have taken a technical write-off for other than that as well. So this has been a broad review of the entire EEB portfolio. And as part of that, based on this assessment, the amount for the technical write-off has been proposed and discussed with our Board. In terms of what drove this, as I had mentioned, this is primarily coming from the perspective of looking at what kind of collection has happened on this particular book and also looking at strengthening our portfolio quality. So this is purely based on the bank's provocative on a conservative stance that this has been done. And that is the basis of driving this particular provision. I think your third question was relating to the slippage numbers. I think our slippages, as I'd mentioned, for the quarter four was INR1,017 crores, which is a significant improvement that we've seen compared to the last quarter of INR1,390 crores. So we've seen a reduction over there. And within that, the EEB book also, we have seen a reduction, which has come through for the slippages, which, in the last quarter, we had seen a slippage of INR991 crores, which has come down to INR625 crores in this quarter. I hope that answers your question. So just to add to what Rajeev said, in the EEB segment, Mahrukh, in the EEB segment, if you see, our entire DPD pool is coming down from -- okay, overall at a slippages level, it has come from INR1,360, INR1,320, INR1,390 in last three quarters to INR1,000 crores in current quarter. As we speak today, the DPD pool has come down from INR2,800 crores in Q1 to INR1,260 crores. So that's the overall DPD pool movement.
Q: First, I wanted to check on CGFMU, again, the entire CGFMU audit portfolio has already been written off. So there is no additional P&L impact irrespective -- negative impact, irrespective of the outcomes on the audit. Is that understanding right? And secondly, if you can highlight the outstanding provisions on the EEB GNPA that we have. So I think the GNPA in EEB book is around INR3,200 crores. What is the outstanding provision only for EEB's outstanding?
A: Correct. That's correct. Rajeev here. So just to answer the three questions that you've asked for. I think MD sir has already talked about the context. If we look at the total technical write-off that was done during the quarter of INR3,852 crores. The CGFMU portfolio within that was INR3,053 crores and remaining was about INR800 crores. The way the bank has actually gone about this is to look at on a prudent basis, on a conservative basis, shore up our provisioning as well as ensure portfolio quality improves. And therefore, this step has been done. The review has been done by taking a consideration of the entire portfolio within the EEB book, which is over particular vintage. And therefore, we have looked at the book, which was pertaining to years FY 2021 and thereabout and looking at what exactly has been the trend of recoveries and therefore, a review has been done in terms of taking a technical write-off. Now naturally, when we look at that, a portion of the book will include the CGFMU, which I had mentioned. But we have taken a technical write-off for other than that as well. So this has been a broad review of the entire EEB portfolio. And as part of that, based on this assessment, the amount for the technical write-off has been proposed and discussed with our Board. In terms of what drove this, as I had mentioned, this is primarily coming from the
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
