InvestorQ : Why did Bandhan Bank report such a sharp fall in the profits for the third quarter Dec-20?
sara Kunju made post

Why did Bandhan Bank report such a sharp fall in the profits for the third quarter Dec-20?

Mary Joseph answered.
1 year ago

Kolkata based Bandhan Bank reported Q3 net profit down 13.5% at Rs.632.6 crore on the back of higher provisioning, especially in the troubled markets of Assam, where they had a major problem even last time around. In terms of revenues, Bandhan Bank reported 25.55% growth in revenues in the Dec-20 quarter at Rs.3,861 crore . The sharp growth in revenues came from treasury activities and retail banking.

Operating profits for the Dec-20 quarter were up 51.44% at Rs.1914 crore on the back of lower interest costs due to the interest cost growing much slower than the interest inflow and hence expanding the NIM. OPM expanded from 41% to 49.57%. However, PAT was down 13.47% at Rs.633 crore due to higher provisions which went up to Rs.1,069 crore in the Dec-20 quarter from Rs.295 crore in Dec-19. PAT margins fell from 23.77% to 16.38%.

Business growth was positive for the quarter with deposits growing by 29.6% and the loan portfolio growing by 22.6%. Even with the deposits family, the CASA deposits share in total deposits moved up from 28.2% to 42.9% on a yoy basis. Net interest income or NII grew by 34.5% and the NIM or the net interest margin came in at a healthy 8.3% compared to 7.9% last year. This is among the highest in the private banking sector.

The real story lay in the gross NPAs and net NPAs and more specifically in the provisioning in the quarter. Gross NPAs and Net NPAs were lower on a yoy basis but provisions as seen earlier were sharply higher. This was largely driven by risks to recovery in the Assam business which continues to be a major market for Bandhan Bank. Higher provisioning in the quarter also led to the ROA contracting sharply.