Bandhan Bank Ltd (BOM:541153) Q2 FY25 Earnings Call Highlights: Strong Profit Growth Amid Asset ...

In This Article:

  • Advances: INR1.31 lakh crores, 21% YoY growth, 4% QoQ growth.

  • Deposits: INR1.43 lakh crores, 27% YoY growth, 7% QoQ growth.

  • Net Interest Margin (NIM): 7.4% in Q2 FY25.

  • Gross NPA: 4.7% in Q2 FY25.

  • Net NPA: 1.3% in Q2 FY25.

  • Profit After Tax: INR937 crores, 30% YoY growth.

  • Return on Assets (ROA): 2.1% annualized.

  • Return on Equity (ROE): 16% annualized.

  • Net Interest Income (NII): INR2,948 crores, 21% YoY growth.

  • Operating Profit: INR1,855 crores, 17% YoY growth.

  • Capital Adequacy Ratio (CRAR): 15.6% including profits for H1 FY25.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Bandhan Bank Ltd (BOM:541153) reported a profit after tax of INR937 crores for Q2 FY25, marking a 30% year-on-year increase.

  • The bank's net interest margin (NIM) remained healthy at 7.4%, despite a competitive deposit market and changes in product mix.

  • Deposits grew by 27.2% year-on-year, reaching INR1.43 lakh crores, with a stable retail deposit share of 68%.

  • The secured book now constitutes 47% of advances, up from 42% in March 2024, reflecting a strategic shift towards more secured lending.

  • The bank's transformation program, including intelligent automation and AI adoption, is expected to drive greater efficiency and enhance customer experience.

Negative Points

  • Gross NPA increased to 4.7% in Q2 FY25 from 4.2% in the previous quarter, indicating a deterioration in asset quality.

  • The microfinance sector continues to face headwinds, with elevated risks impacting portfolio quality and leading to increased slippages.

  • Credit costs for the quarter were at 2%, with expectations of elevated slippages and credit costs continuing into Q3 FY25.

  • The cost of funds has increased due to a competitive deposit market, impacting the bank's overall cost structure.

  • The bank's collection efficiency in the EEB book declined to 98.1% in Q2 FY25 from 98.7% in Q1 FY25, reflecting stress in the microfinance segment.

Q & A Highlights

Q: How should we think about slippages in the coming quarters, and what percentage of your customers are overdue but still paying their EMIs? A: Slippages are expected to remain elevated in Q3, similar to Q1. The bigger problems are in specific geographies. The DPD pool, including SMA-0, SMA-1, and SMA-2 buckets, has seen an elevation, especially in the microfinance sector. The credit cost guidance remains at 1.8% to 2% for the full financial year, with expectations of improvement by Q4.

Q: What percentage of your customers are unique to Bandhan Bank, and how many have additional lenders? A: Bandhan Bank Unique customers are 60%; Bandhan Plus 1 is 80%; and Bandhan Plus 4 and above is 4.5%. This indicates that 60% of customers have Bandhan as their sole lender.