Bandhan Bank , a prominent private sector lender, reported a sharp decline in its first-quarter profits for the current fiscal year, although the results surpassed market expectations. The bank's financial performance reflects challenges in revenue generation and asset quality.

Profit Nosedives, Yet Exceeds Forecasts

Bandhan Bank announced a net profit of ₹370.00 crore for the first quarter, marking a substantial 65% decrease from ₹1,063.00 crore recorded in the same period last year. Despite this significant drop, the bank's performance exceeded analyst projections of ₹340.00 crore, demonstrating resilience in a challenging economic environment.

Revenue Dips Marginally

The bank's revenue showed a slight contraction, decreasing to ₹5,470.00 crore from ₹5,536.00 crore year-over-year. This marginal decline of 1.2% suggests that Bandhan Bank is facing headwinds in its core business operations.

Asset Quality Concerns

Bandhan Bank's asset quality metrics showed signs of stress during the quarter:

• Gross Non-Performing Assets (GNPA) ratio increased to 4.96% from 4.71% in the previous quarter.
• Net Non-Performing Assets (NNPA) ratio rose to 1.36% from 1.28% quarter-over-quarter.

This deterioration in asset quality could be a cause for concern and may require close monitoring in the coming quarters.

Financial Performance at a Glance

While Bandhan Bank has managed to outperform analyst expectations in terms of profitability, the significant year-over-year decline in net profit and the deteriorating asset quality metrics highlight the challenges faced by the bank. The marginal decrease in revenue further underscores the difficult operating environment.

As the financial year progresses, stakeholders will likely keep a close eye on Bandhan Bank's strategies to improve asset quality and drive revenue growth in the face of ongoing economic uncertainties.

Bandhan Bank , one of India's fastest-growing private sector banks, has reported a 17% sequential increase in its profit after tax (PAT) for the first quarter. The bank's financial results, approved by its Board of Directors on July 18, reveal a PAT of ₹372.00 crore for the quarter ended June 30.

Key Financial Highlights

• Profit After Tax (PAT): ₹372.00 crore, up 17% from ₹318.00 crore in the previous quarter
• Deposits: Grew 16% year-on-year (YoY) to ₹1.55 lakh crore
• Gross Advances: Increased 6% YoY to ₹1.34 lakh crore
• Net Interest Income (NII): ₹2,757.00 crore, remaining flat compared to the previous quarter
• Net Interest Margin (NIM): 6.40% for the quarter

Improved Asset Quality and Secured Book Growth

One of the notable achievements for Bandhan Bank this quarter was the significant growth in its secured loan book. The bank reported that its secured book share grew from 43% to over 52% YoY, indicating a strategic shift towards more secure lending practices.

Deposit and Advance Growth

The bank's deposit base showed robust growth, increasing by 16% YoY to reach ₹1.55 lakh crore. Retail deposits, comprising CASA (Current Account Savings Account) and Retail Term Deposits, accounted for 68% of total deposits.

On the advances front, Bandhan Bank's gross advances grew by 6% YoY, reaching ₹1.34 lakh crore. The growth was primarily driven by the retail and wholesale banking segments:

• Retail book (excluding housing): 78% YoY growth
• Wholesale Banking: 32% YoY growth
• Housing book: 15% YoY growth

It's worth noting that the Emerging Entrepreneurs Business (EEB) book contracted by 15% during this period, aligning with the bank's strategy to diversify its loan portfolio.

Asset Quality

The bank's asset quality showed some pressure, with:

• Gross Non-Performing Assets (GNPA) ratio at 5.00% in Q1
• Net Non-Performing Assets (NNPA) ratio at 1.40% in Q1

However, the bank maintained a healthy Provision Coverage Ratio (PCR) of 73.70%, which increases to 87.30% when including write-offs.

Capital Adequacy

Bandhan Bank's capital position remains strong, with a Capital Adequacy Ratio of 19.40% as of June 30, well above the regulatory requirement of 11.50%.

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 challenging operating environment, Bandhan Bank's Q1 results demonstrate its resilience and strategic focus on diversifying its loan book and improving asset quality. The significant growth in secured lending and retail deposits, coupled with expansion in retail and wholesale banking segments, indicates the bank's commitment to a more balanced and sustainable growth model.

As Bandhan Bank continues to navigate the evolving financial landscape, its focus on prudent risk management, operational efficiency, and long-term value creation for customers and stakeholders positions it well for future growth and stability in the Indian banking sector.