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Elevated slippages from EEB book
View Risks →Bandhan Bank Limited — Q2 FY24
Bandhan Bank reported a strong Q2 FY24 with PAT surging 245% YoY to INR 721 crore, driven by improved collection efficiency and lower credit costs.
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Bandhan Bank reported a strong Q2 FY24 with PAT surging 245% YoY to INR 721 crore, driven by improved collection efficiency and lower credit costs. Advances grew 12.3% YoY with secured loan share reaching 44%, up from 38% a year ago. NIM remained healthy at 7.2%, with September exit at 7.3%. Asset quality showed mixed trends: gross NPA rose to 7.3% but DPD pools contracted, and post-COVID book GNPA stood at 2.6%. Management reiterated credit cost guidance of 2% ±20bps for FY24 and loan growth of ~20% YoY, backed by festive demand and new CBS platform. Key risks include elevated slippages from the EEB book and delays in CGFMU recoveries.
बंधन बैंक ने दूसरी तिमाही में शानदार प्रदर्शन किया। इसका मुनाफा पिछले साल की तुलना में 245% बढ़कर 721 करोड़ रुपये हो गया। यह बढ़त लोन वसूली बेहतर होने और कर्ज पर खर्च कम होने से आई। बैंक ने कुल लोन में 12.3% की बढ़त दर्ज की, जिसमें सुरक्षित लोन (जैसे घर या गाड़ी पर लिया गया कर्ज) का हिस्सा 38% से बढ़कर 44% हो गया। बैंक की कमाई पर ब्याज दर का फायदा (NIM) 7.2% रहा। हालांकि, बैंक का फंसा कर्ज (NPA) थोड़ा बढ़कर 7.3% हो गया, लेकिन कोरोना के बाद के लोन में यह सिर्फ 2.6% रहा। प्रबंधन ने इस साल लोन में 20% बढ़त और कर्ज पर खर्च 2% के आसपास रहने का अनुमान जताया है।
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Read Transcript →Quarter Snapshot
Collection Efficiency (EEB, excl. NPA)
98%
+300bps YoY
EEB collection efficiency improved to 98% in Sep 2023 from 95% a year ago, reflecting better portfolio quality.
Secured Loan Share
44%
+600bps YoY
Secured assets as a share of total advances rose to 44% from 38% YoY, targeting 50% by FY26.
CASA Ratio
38.5%
+250bps QoQ
CASA ratio improved to 38.5% from 36% in Q1, driven by savings rate hike and customer additions.
Post-COVID Book GNPA
2.6%
flat QoQ
GNPA of loans disbursed after June 2022 remained low at 2.6%, indicating healthy vintage performance.
What Changed vs Last Quarter
NEW
OpEx to assets ratio of 3.5% for FY24
Management guided for operating expenses to assets ratio of 3.5% for FY24, with balance sheet growth in H2 absorbing costs.
NEW
Secured loan share target of 50% by FY26
The bank aims to increase the share of secured assets to 50% of total advances by fiscal year 2026, up from 44% currently.
UPDATED
Loan growth of ~20% YoY for FY24
Management expects overall advances to grow nearly 20% year-on-year, driven by festive demand and strong disbursements in H2.
UPDATED
Credit cost guidance of 2% ±20bps for FY24
The bank expects credit cost to remain in the range of 1.8% to 2.2% for the full year, supported by lower slippages and higher recoveries in H2.
DROPPED
NIM guidance of 7-7.5%
Net interest margin expected to remain in the 7% to 7.5% range.
DROPPED
Branch count target of 1,600 by FY24 end
Bank plans to reach approximately 1,600 branches by the end of the financial year.
NEW RISK
Delay in CGFMU and ECLGS recoveries
CGFMU recovery of ~INR 1,600 crore delayed due to audit queries; ECLGS recovery of INR 410 crore pending due to operational constraints. Management could not provide a timeline.
NEW RISK
NIM compression from rising cost of funds
Cost of funds expected to rise 20-25 bps in coming quarters due to savings rate hike and term deposit repricing, which could pressure NIMs despite higher yields.
NEW RISK
Slow growth in housing loan book
Housing finance book grew only ~4% YoY, lagging other segments. While disbursement run-rate has improved, sustained growth remains uncertain.
RISK GONE
Core banking system migration disruption
Migration to a new core banking system in Q2 may cause operational disruption for 2-3 weeks, impacting growth.
RISK GONE
ECLGS guarantee recovery delays
Recovery of ECLGS claims may be delayed due to capacity constraints in the government portal, though expected in 3-6 months.
RISK GONE
NIM pressure from rising deposit costs
Cost of deposits rose 60bps QoQ due to mix shift and TD repricing; further repricing of ~60bps may pressure NIM.
Fast read
Guidance and risk preview
Management expects overall advances to grow nearly 20% year-on-year, driven by festive demand and strong disbursements in H2.
Despite DPD reduction, gross slippages remained high at INR 1,320 crore, with EEB contributing INR 1,000 crore.
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