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Capital adequacy pressure from higher risk weights
View Risks →Bandhan Bank Limited — Q1 FY25
Bandhan Bank reported a strong Q1 FY25 with PAT of INR 1,063 crore (+47% YoY) driven by robust advances growth of 22% YoY and stable NIM of 7.6%.
bullish
high
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Bandhan Bank reported a strong Q1 FY25 with PAT of INR 1,063 crore (+47% YoY) driven by robust advances growth of 22% YoY and stable NIM of 7.6%. Asset quality improved with gross slippages declining to INR 891 crore from INR 1,017 crore in Q4 FY24. The bank reversed the historical Q1 sequential decline in advances, posting 1% QoQ growth. Management guided for 18-20% loan growth and credit cost of 1.8-2% for FY25. Key risk: the increase in risk weights on the EEB portfolio to 125% reduced CRAR by 362 bps to 15%, potentially constraining growth if capital is not managed carefully.
बंधन बैंक ने पहली तिमाही (Q1 FY25) में शानदार प्रदर्शन किया। उसका शुद्ध लाभ (PAT) ₹1,063 करोड़ रहा, जो पिछले साल से 47% ज़्यादा है। इसकी वजह कर्ज देने में 22% की बढ़ोतरी और ब्याज दरों पर कमाई (NIM) 7.6% पर स्थिर रहना है। बैंक के खराब कर्ज (NPA) में सुधार हुआ है - नए खराब कर्ज (slippages) ₹891 करोड़ रहे, जो पिछली तिमाही के ₹1,017 करोड़ से कम हैं। पहली बार इस तिमाही में कर्ज में पिछली तिमाही से 1% की बढ़ोतरी हुई। बैंक ने पूरे साल 18-20% कर्ज बढ़ोतरी और 1.8-2% कर्ज घाटा (credit cost) का अनुमान लगाया है। लेकिन एक चिंता है: छोटे कर्ज (EEB) पर जोखिम भार 125% होने से बैंक की पूंजी पर्याप्तता (CRAR) 15% पर आ गई, जिससे भविष्य में कर्ज बढ़ाना मुश्किल हो सकता है।
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Read Transcript →Quarter Snapshot
Gross Advances
INR 126,000 crore
+22% YoY
Gross advances grew 22% YoY to INR 126,000 crore, reversing historical Q1 sequential decline.
Gross NPA Ratio
4.2%
+40bps QoQ
Gross NPA ratio increased to 4.2% from 3.8% in Q4 FY24, but net NPA stable at 1.1%.
CASA Ratio
33.4%
-260bps QoQ
CASA ratio declined sequentially to 33.4% due to year-end outflows, but retail deposits stable at 69%.
Credit Cost
1.6%
-40bps QoQ
Credit cost moderated to 1.6% in Q1 FY25, below the guided range of 1.8-2% for FY25.
What Changed vs Last Quarter
NEW
Deposit growth higher than loan growth
Deposit growth will continue to outpace advances growth, with focus on retail deposits.
NEW
NIM maintained at 7-7.5%
Net interest margin is expected to remain in the range of 7-7.5% for FY25.
UPDATED
Loan growth of 18-20% for FY25
Management expects overall loan book growth of 18-20% for FY25, with secured book growing faster than EEB.
UPDATED
Credit cost guidance of 1.8-2% for FY25
Credit cost for FY25 is expected to be in the range of 1.8-2%, despite Q1 coming in lower at 1.6%.
DROPPED
Deposit growth to outpace advances growth
Bank aims for liability-first approach with deposits growing faster than assets to improve CD ratio.
DROPPED
CGFMU claim resolution expected in Q1 FY25
Management expects the pending CGFMU audit to conclude in Q1 FY25, with a positive outcome anticipated.
NEW RISK
Capital adequacy pressure from higher risk weights
The increase in risk weights on EEB portfolio to 125% reduced CRAR by 362 bps to 15%, potentially limiting growth if capital is not managed.
NEW RISK
Asset quality stress in Punjab and Maharashtra
Management noted stress in SMA books from Punjab and Maharashtra, which could lead to higher slippages.
NEW RISK
CASA ratio decline and deposit cost pressure
CASA ratio fell to 33.4% from 36% QoQ, and competitive deposit market may keep cost of funds elevated, pressuring NIMs.
RISK GONE
CGFMU audit outcome uncertainty
The pending CGFMU audit may not yield the expected positive result, potentially impacting recoveries and capital.
RISK GONE
Slippage normalization may be slower than expected
Despite improvement, slippages remain elevated at ₹1,017 crore; analysts questioned whether the run rate is truly sustainable.
RISK GONE
Operating expense pressure
OpEx grew 32% YoY in Q4 (23% adjusted for one-offs), and management expects cost-income ratio to remain elevated in FY25 due to investments.
🤫 Topics management stopped discussing
Mentioned in Q3 FY24, Q4 FY24
The pending CGFMU audit may not yield the expected positive result, potentially impacting recoveries and capital.
Mentioned in Q1 FY24, Q2 FY24
Despite DPD reduction, gross slippages remained high at INR 1,320 crore, with EEB contributing INR 1,000 crore. Management expects H2 improvement but past trends show elevated slippages in H2 as well.
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Guidance and risk preview
Management expects overall loan book growth of 18-20% for FY25, with secured book growing faster than EEB.
The increase in risk weights on EEB portfolio to 125% reduced CRAR by 362 bps to 15%, potentially limiting growth if capital is not managed.
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