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Elevated MFI stress and slippages
View Risks →Bandhan Bank Limited — Q2 FY25
Bandhan Bank reported a mixed Q2 FY25 with PAT of INR 937 crore (+30% YoY) and NIM of 7.4%, but asset quality weakened as gross NPA rose to 4.7% and credit costs hit 2%.
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Bandhan Bank reported a mixed Q2 FY25 with PAT of INR 937 crore (+30% YoY) and NIM of 7.4%, but asset quality weakened as gross NPA rose to 4.7% and credit costs hit 2%. Growth was driven by secured book expansion (secured share up to 47%), with retail assets surging 91% YoY. However, the microfinance portfolio faced elevated stress, with EEB slippages rising to INR 752 crore and SMA-0/1/2 pools increasing. Management maintained credit cost guidance of 1.8%-2% for FY25 but expects elevated slippages in Q3. A key positive was the CGFMU audit resolution, yielding a net claim of INR 543 crore. Risks include prolonged MFI stress and potential margin compression from mix shift.
बंधन बैंक का Q2 FY25 का नतीजा मिला-जुला रहा। मुनाफा 937 करोड़ रुपये रहा, जो पिछले साल से 30% ज्यादा है। ब्याज से कमाई का अनुपात 7.4% रहा, लेकिन कर्ज की गुणवत्ता कमजोर हुई। खराब कर्ज (NPA) बढ़कर 4.7% हो गया और कर्ज वसूली पर खर्च 2% तक पहुंच गया। अच्छी बात यह रही कि सुरक्षित कर्ज (जैसे गाड़ी या घर पर लोन) का हिस्सा 47% तक बढ़ा और रिटेल लोन में 91% का उछाल आया। लेकिन माइक्रोफाइनेंस (छोटे कर्ज) में परेशानी बढ़ी, जहां डिफॉल्ट का आंकड़ा 752 करोड़ रुपये पहुंच गया। बैंक ने कहा कि अगली तिमाही में भी डिफॉल्ट बढ़ सकते हैं। सकारात्मक पहलू यह रहा कि CGFMU से 543 करोड़ रुपये का दावा मंजूर हुआ। जोखिम में माइक्रोफाइनेंस का दबाव और कमाई पर असर शामिल है।
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Gross NPA Ratio
4.7%
+50bps QoQ
Gross NPA increased from 4.2% in Q1 FY25 due to higher slippages in the EEB book.
EEB Collection Efficiency (ex-NPA)
98.1%
-60bps QoQ
Declined from 98.7% in Q1 FY25, reflecting stress in the microfinance segment.
Secured Book Share
47%
+420bps vs Mar'24
Increased from 42.8% in March 2024, driven by growth in retail, housing, and commercial banking.
CASA Ratio
33.2%
-20bps QoQ
Stable sequentially, but slightly lower due to competitive deposit market and higher term deposit growth.
What Changed vs Last Quarter
NEW
OpEx to assets ratio similar to FY24
Operating expenses to average assets ratio expected to be at similar levels as FY24, around 3.7%-3.8%.
UPDATED
Credit cost guidance of 1.8%-2% for FY25
Management expects full-year credit cost to remain within 1.8%-2% of advances, with Q3 potentially elevated but Q4 showing improvement.
UPDATED
Advances growth of 18% ± 1% for FY25
Overall advances growth target of 18% ± 1%, with EEB growing at 10%-12% and secured book growing faster.
UPDATED
NIM guidance of 7%-7.5% for FY25
Net interest margin expected to remain in the 7%-7.5% range, with some moderation in coming quarters due to product mix shift.
DROPPED
Deposit growth higher than loan growth
Deposit growth will continue to outpace advances growth, with focus on retail deposits.
NEW RISK
Elevated MFI stress and slippages
EEB slippages increased to INR 752 crore in Q2, and SMA-0/1/2 pools expanded. Management expects elevated slippages in Q3, with uncertainty on recovery timing.
NEW RISK
Margin compression from product mix shift
Shift towards secured assets (lower yield) could pressure NIMs. Management acknowledged potential yield stress in coming quarters.
NEW RISK
Over-leveraging in microfinance sector
Despite Bandhan's unique customer share of 60%, industry-wide over-leveraging and credit freeze risks could impact asset quality. RBI actions on MFI lenders may add systemic risk.
RISK GONE
Asset quality stress in Punjab and Maharashtra
Management noted stress in SMA books from Punjab and Maharashtra, which could lead to higher slippages.
RISK GONE
CEO succession uncertainty
The bank is operating with an interim MD&CEO; the board has not yet submitted names to RBI, creating leadership uncertainty.
RISK GONE
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.
🤫 Topics management stopped discussing
Mentioned in Q1 FY24, Q1 FY25, Q2 FY24, Q4 FY24
Management expects overall loan book growth of 18-20% for FY25, with secured book growing faster than EEB.
Mentioned in Q1 FY25, Q4 FY24
The bank is operating with an interim MD&CEO; the board has not yet submitted names to RBI, creating leadership uncertainty.
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.
Fast read
Guidance and risk preview
Management expects full-year credit cost to remain within 1.8%-2% of advances, with Q3 potentially elevated but Q4 showing improvement.
EEB slippages increased to INR 752 crore in Q2, and SMA-0/1/2 pools expanded.
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