Bandhan Bank Q1 Results: Profit Up 47.4% On Higher Other Income, NPAs Rise

Bandhan Bank Ltd.'s profit rose in the first quarter of fiscal 2025, beating analysts' estimates.

The lender's standalone net profit rose 47.4% year-on-year to Rs 1,063.4 crore, according to an exchange filing on Friday. Analysts polled by Bloomberg estimated a net profit of Rs 783.5 crore.

• Net profit up 47.4% to Rs 1,063.4 crore versus Rs 721 crore (YoY).

• Net interest income up 20.6% to Rs 3,005.1 crore versus Rs 2,490 crore (YoY).

• Gross NPA at 4.23% versus 3.84% (QoQ).

• NNPA at 1.15% versus 1.11% (QoQ).

Net interest income, or core income, rose 20.6% year-on-year to Rs 3,005.1 crore. Other income too, surged 36.9% to Rs 527.5 crore on a yearly basis.

Asset quality for the lender worsened, with gross non-performing asset ratio rising 39 basis points quarter-on-quarter to 4.23%. Net NPA ratio, too, worsened 4 bps to 1.15%, as compared to 1.11% in the previous quarter.

"... (The) bank's continued focus on recoveries led to steady performance in asset quality," said Ratan Kumar Kesh, managing director and chief executive officer at Bandhan Bank, in a post results analysts call.

Provisions for the quarter fell 13.1% year-on-year to Rs 522.9 crore. The provision coverage ratio as of June 30 stood at 73.7%, as compared to 71.8% in the previous quarter.

Operating expenses rose 21.1% year-on-year to Rs 1,591.6 crore.

Net interest margin, another profitability indicator, for the quarter was at 7.6%, stable sequentially. "...Despite some pressure on cost of funds, we have been able to sustain our margins QoQ," the management told analysts.

The lender's total deposits grew 23.% year-on-year to Rs 1.33 lakh crore. However, sequentially, they declined 1.5%.

Here, CASA deposits stood at Rs 44,456 crore and the lender's CASA ratio was at 33.4%.

Gross advances for Bandhan Bank stood at Rs 1.26 lakh crore, up 22% year-on-year. Here, retail book grew 83% year-on-year, commercial banking by 30% year-on-year and housing book was at 13% year-on-year.

The management said that it took a call to increase risk weights to 125% on its EV portfolio, as collection efficiencies declined in Q1. "... saw some slowdown in collection efficiencies due to heatwave in some areas..."

They added that the bank wants to have product and geographic diversification.

On the appointment of a new MD and CEO, Kesh said that the bank's board has appointed a search firm for potential candidates. The process is being followed and is on track, he said.

The CGFMU (Credit Guarantee Fund for Micro Units) audit has progressed well and the bank has provided the authorities all the support needed, Kesh said. "...audit process is nearing closure and the management is confident of it going well," he said.

Responding to a question, the management said that the bank's asset growth will happen in both microfinance and secured book, but growth in the latter would be higher as there is a change in strategy.

While they don't have any limitations on lending to NBFCs and maintain a stable outlook on NBFC-MFI, they expect growth to be muted.