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CGFMU audit outcome uncertainty
View Risks →Bandhan Bank Limited — Q4 FY24
Bandhan Bank reported a Q4 FY24 PAT of ₹55 crore, sharply down due to a ₹3,852 crore technical write-off on legacy microfinance loans, primarily from pre-2022 vintages.
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Bandhan Bank reported a Q4 FY24 PAT of ₹55 crore, sharply down due to a ₹3,852 crore technical write-off on legacy microfinance loans, primarily from pre-2022 vintages. Excluding this, normalized PAT growth would have exceeded 30%. Net interest income grew 16% YoY to ₹2,866 crore, with NIM improving to 7.6% aided by lower slippages. Gross NPA fell to 3.8% from 7% QoQ after the write-off. Management guided for 17-20% loan growth in FY25, with credit costs normalizing to 1.8-2%. Key risks include the pending CGFMU audit outcome and CEO succession uncertainty.
बंधन बैंक ने चौथी तिमाही में 55 करोड़ रुपये का मुनाफा कमाया, जो पहले से काफी कम है। इसकी वजह पुराने छोटे कर्जों (माइक्रोफाइनेंस) पर 3,852 करोड़ रुपये का तकनीकी बट्टा खाते में डालना है। ये कर्ज 2022 से पहले के हैं। अगर इसे हटा दें, तो मुनाफा 30% से ज्यादा बढ़ता। बैंक की ब्याज से कमाई 16% बढ़कर 2,866 करोड़ रुपये हुई। खराब कर्ज (NPA) घटकर 3.8% रह गया। अब बैंक अगले साल 17-20% कर्ज बढ़ाने की योजना बना रहा है। लेकिन CGFMU ऑडिट और नए CEO की नियुक्ति जैसे मुद्दे अब भी अनिश्चित हैं।
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Gross NPA Ratio
3.8%
-320bps QoQ
Improved sharply after technical write-off of ₹3,852 crore in legacy EEB portfolio.
EEB SMA 0-2 Pool
₹1,260 crore
-34% QoQ
Reduced from ₹1,900 crore in Q3, reflecting improving asset quality in microfinance.
Gross Slippages
₹1,017 crore
-27% QoQ
Down from ₹1,394 crore in Q3; EEB slippages fell to ₹632 crore.
CASA Ratio
37.1%
+100bps QoQ
Improved from 36.1% in Q3, aided by deposit growth of 25% YoY.
What Changed vs Last Quarter
NEW
Loan growth of 17-20% in FY25
Management expects total advances to grow 17-20% over the next 2-3 years, with EEB growing 14-15%.
NEW
Normalized credit cost of 1.8-2% in FY25
CFO guided for total portfolio credit cost between 1.8% and 2% in FY25, down from 3.4% in FY24.
NEW
Deposit growth to outpace advances growth
Bank aims for liability-first approach with deposits growing faster than assets to improve CD ratio.
NEW
CGFMU claim resolution expected in Q1 FY25
Management expects the pending CGFMU audit to conclude in Q1 FY25, with a positive outcome anticipated.
DROPPED
Secured assets to reach ~50% by FY26
Management expects secured portfolio share to increase from current 44.5% to nearly 50% by FY26.
DROPPED
NIM to remain in 7%-7.5% range near-term
Management guided NIM to stay around 7%-7.5% in the near term, with a strategic review in March.
DROPPED
ROA target of 2.5%-2.8% and ROE of 14%-18%
Medium-term guidance for ROA and ROE, with detailed three-year plan to be shared after February strategy meet.
NEW RISK
CEO succession risk
Founder MD & CEO Chandra Shekhar Ghosh is retiring on July 9, 2024, and a successor has not yet been identified, creating leadership uncertainty.
NEW RISK
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.
NEW RISK
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.
RISK GONE
Margin compression from secured asset shift
As the bank increases secured asset share, yields may decline, potentially pressuring NIMs despite cost controls.
RISK GONE
Slippage run-rate uncertainty
Management expects INR 300-500 crore quarterly slippage addition, but this may vary if collection efficiency weakens.
🤫 Topics management stopped discussing
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 total advances to grow 17-20% over the next 2-3 years, with EEB growing 14-15%.
The pending CGFMU audit may not yield the expected positive result, potentially impacting recoveries and capital.
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