Bandhan Bank , a leading private sector lender, reported a mixed bag of results for the first quarter, with profit beating estimates but asset quality showing signs of stress. The bank's net profit stood at ₹370.00 crore for the quarter ended June 30, surpassing market expectations despite a significant year-on-year decline.

Key Financial Highlights

• Net Profit: ₹370.00 crore, down from ₹1,063.00 crore year-over-year, but slightly above the estimated ₹340.00 crore
• Revenue: Decreased to ₹5,470.00 crore from ₹5,536.00 crore in the same period last year
• Provisions: ₹1,146.00 crore, down from ₹1,260.00 crore quarter-on-quarter

Asset Quality Concerns

The bank's asset quality showed signs of deterioration:

• Gross Non-Performing Assets (GNPA) Ratio: Rose to 4.96% from 4.71% in the previous quarter
• Net Non-Performing Assets (NNPA) Ratio: Increased to 1.36% from 1.28% quarter-on-quarter

Business Segment Performance

Bandhan Bank's various business segments showed mixed performance:

Deposit and Advances

The bank's deposit base saw healthy growth:

• Total Deposits: ₹1.55 lakh crore, up 16% year-on-year
• CASA Ratio: Stood at 27.1%
• Retail Deposits: ₹63,661.00 crore, grew 34% year-on-year

On the advances front:

• Gross Advances: ₹1.34 lakh crore, up 6% year-on-year
• Secured Book: Grew at 29% year-on-year, increasing its share from 43% to above 52%

Management Commentary

Partha Pratim Sengupta, MD & CEO of Bandhan Bank, commented on the results: "Bandhan Bank has delivered a sequentially improving performance in Q1, marked by strong growth in deposits and continued momentum in Retail & Wholesale banking. While the operating environment poses certain challenges, our performance reflects the underlying resilience of our business and the strength of our strategic direction."

Outlook

Despite the year-on-year decline in profits, Bandhan Bank's better-than-expected bottom line suggests resilience in its business model. However, the rising NPAs indicate ongoing challenges in the operating environment, particularly in the bank's core microfinance segment.

The bank's focus on growing its secured book and diversifying its loan portfolio could help mitigate risks in the coming quarters. Investors and analysts will be closely watching the bank's asset quality trends and its ability to maintain growth momentum in its retail and wholesale banking segments.

Bandhan Bank's stock is likely to be in focus as the market digests these mixed results and assesses the bank's future growth prospects in light of the evolving economic conditions.

Bandhan Bank has reported robust growth in deposits for the first quarter, while loan growth showed signs of moderation. The bank's financial performance reflects a mixed picture of strong deposit accumulation and slower credit expansion.

Deposit Growth Momentum

Bandhan Bank witnessed a significant year-on-year (YoY) growth of 16.1% in total deposits, which reached ₹1.55 lakh crore. This substantial increase in deposits underscores the bank's ability to attract and retain customer funds, potentially indicating strong customer trust and effective deposit mobilization strategies.

Loan Growth and Quarterly Decline

While the bank's loan book expanded by 6.4% YoY, it experienced a quarter-on-quarter (QoQ) contraction of 2.5%. This suggests a slowdown in credit offtake, which could be attributed to various factors such as economic conditions, changes in lending policies, or seasonal fluctuations in credit demand.

CASA Ratio Decline

The Current Account Savings Account (CASA) deposits of Bandhan Bank saw a decline, leading to a reduction in the CASA ratio to 27.06%. A lower CASA ratio typically implies a higher cost of funds for the bank, as it may need to rely more on term deposits or other higher-cost funding sources.

Strong Liquidity Position

Despite the challenges in loan growth and CASA deposits, Bandhan Bank maintained a robust liquidity coverage ratio (LCR) of 178.28%. This high LCR indicates that the bank has ample high-quality liquid assets to meet its short-term obligations, providing a strong buffer against potential liquidity stress scenarios.

Key Financial Metrics

Bandhan Bank's Q1 performance presents a nuanced picture of its financial health. While the substantial growth in deposits is a positive sign, the moderation in loan growth and the decline in CASA ratio may require attention. The bank's strong liquidity position, however, provides a solid foundation for navigating potential challenges in the coming quarters.