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What the record says.
Bandhan Bank reported a stable Q1 FY24 with net profit of INR 721 crore, down 18.7% YoY from INR 887 crore, impacted by seasonal weakness in microfinance and higher provisions. Advances grew 6.7% YoY but declined sequentially due to a INR 2,151 crore large FD-backed loan repayment and a ~10% QoQ drop in microfinance. Retail and commercial banking grew strongly at 87% and 78% YoY respectively. NIM held at 7.3%, and credit cost improved to 2.4% from 2.9% QoQ. Management guided for 20%+ loan growth in FY24, credit cost around 2%, and NIM of 7-7.5%. Key risks include elevated slippages in the microfinance book and potential disruption from core banking system migration in Q2.
Colored figures show movement against the previous available record.
Guidance to track
- Advances expected to grow over 20% for the full year, with microfinance growing 17%.
- Credit cost guided at approximately 2%, with a possible variance of 20 basis points.
- Net interest margin expected to remain in the 7% to 7.5% range.
- Bank plans to reach approximately 1,600 branches by the end of the financial year.
Risks flagged
- Q1 slippages of INR 920 crore from the EEB book were higher than expected, though management cites seasonality.
- Migration to a new core banking system in Q2 may cause operational disruption for 2-3 weeks, impacting growth.
- Recovery of ECLGS claims may be delayed due to capacity constraints in the government portal, though expected in 3-6 months.
- Cost of deposits rose 60bps QoQ due to mix shift and TD repricing; further repricing of ~60bps may pressure NIM.
Key quotes
- We expect that approximately half of our book should be secured book by financial year 2026.
- Our endeavor is to keep it within 2%.
- We have to recruit at least two, three months ahead of opening up a branch.
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