Bandhan Bank’s profits fall by 29% even though asset quality shows improvement

Bandhan Bank's profits take a hit of 29% in the fourth quarterBandhan Bank
  • Bandhan Bank's profits fell by over 29% in the fourth quarter.
  • Its gross non-performing asset ratio showed improved from 1.93% in the last quarter to 1.48% between January to March.
  • Bandhan Bank's share price has showed marked improvement in the lockdown period but dipped by 1% before markets closed today.
Bandhan Bank’s profits fell by over 29% in the fourth quarter even as its asset quality improved. With 3.92% more deposits in its kitty and gross non-performing assets falling to 1.48% from 1.93% in December.

Bandhan Bank's net profits over the last yearBandhan Bank earnings reports/Flourish/BI India

One of India’s largest microfinance institutions share price had managed to recover by over 54% since the lockdown was announced on March 25. Today the stock closed in the red 1.65% below yesterday's closing after recuperating from a dip of nearly 4% around noon.

Bandhan Bank's share price since the lockdown was announcedBSE/Flourish/BI India

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However, analysts are worried about India’s finance industry as the lockdown leaves any without a job — making it difficult for them to make payments on loans.

Bandhan Bank's gross NPA's over the last yearBandhan Bank earnings report/Flourish/BI India

Keeping that in mind, Bandhan Bank increased provision by ₹690 crore. “With this provision and additional Standard Assets provision that Bank is carrying in Micro banking portfolio total additional provision in books stands at ₹ 1000 crore,” it said in a statement.

MD and CEO of Bandhan Bank Chandrasekhar Ghosh told PTI that repayments would not be an issue for the bank in April. Even though the recovery of loans stopped from March 23 — since bank personnel couldn’t physically go to collect the money due tot he lockdown — the borrowers’ businesses are continuing as usual.
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Bandhan BankMarch 2020December 2019
Net profit₹ 51,728.53 lakh₹ 73,103.33 lakh
Gross NPA %1.48%1.93%
Deposits₹ 57,08,150.36 lakh₹ 43,23,162.03 lakh
CASA Ratio36.8%34.3%

The three month moratorium period on loan repayments by the Reserve Bank of India (RBI) will come to close on May 31, when the true impact of the coronavirus on bad loans will come to light. According to Ghosh, interest will be recovered irrespective of whether the bank’s customers opt for the moratorium or not.

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