Bandhan posts Rs 1,112 cr profit as NIM rises to 10%

Bandhan Bank, in its first full year of operations, has earned a net profit of Rs 1,112 crore in FY17.

The erstwhile microfinance lender, which began its journey as a full-fledged bank in August 2015, had posted a profit of Rs 275.25 crore for the seven-month period after the commencement of operations.

Loans of around Rs 30,000 on average, mostly extended to small borrowers, grew 51% to Rs 23,543.29 crore.

The retail advances constituted nearly 100% of the loan portfolio of the bank.

Of this Rs 23,543 crore, about Rs 6,704 crore was sold to other banks in the form of participation certificates to fulfil priority sector lending target of these banks.

According to Reserve Bank of India master circular of inter-bank participation certificates (IBPCs), such IBPCs bought by banks, on a risk-sharing basis, are eligible for classification under respective categories of priority sector, if underlying assets are eligible to be categorised as priority sector lending.

Small enterprise loan book touched Rs 1,054 crore, growing more than ten times over Rs 100 crore. These are loans having ticket size ranging from Rs 1 lakh to Rs 10 lakh.

Despite a high average borrowing cost of 8%, a lending rate of 18.5% for micro-loans helped Bandhan achieve a net interest margin of 10%, which was 9% a year back.

With a rise in low-cost deposits, Bandhan has been lowering lending rates, from 22.4% in 2015 to 18.5% now.

Amid growth in lending and worsening of repayment environment, gross non-performing asset ratio rose to 0.38% from 0.15% in the previous year. Similarly, net non-performing asset ratio from 0.08% to 0.26%.

In comparison, Kotak Bank, which also came out with its results on Thursday, saw its gross and net NPA levels touching 2.59% and 1.26% respectively for FY17.

The entire balance-sheet of erstwhile microfinance player Bandhan Financial Services was transferred to Bandhan Bank effective August 23.

Capital adequacy ratio was 26.36% with Tier 1 capital adequacy ratio at 24.77%.

As per the directions of RBI on Guidelines for Licensing of New Banks in the private sector, Bandhan Bank is required to maintain a minimum capital adequacy ratio of 13% of its risk-weighted assets for a minimum period of three years.

The bank currently serves a customer base of 10.5 million across 33 states and union territories through a network of 840 branches and 282 ATMs. It has 24,220 employees on its payroll which will rise to 30,000 by March 2018 by when its branch strength would touch 1,000.

While Bandhan plans to remain largely a lender to micro-borrowers, it would continue to significantly expand its loans for affordable housing, personal loans and gold loans, Chandra Shekhar Ghosh, founder, managing director and CEO of Bandhan Bank said.

GROWING FOLIO

• Loans of around Rs 30,000 on average grew 51% to Rs 23,543.29 crore
   
• Rs 6,704 crore loans sold to other banks to fulfil their priority sector lending target