Bandhan Bank profit rises 45%; seeks to open 187 branches this year

Bandhan Bank's board has approved opening 187 more branches and 340 doorstep service centres this year

On the back of growth in the microfinance business, Bandhan Bank today reported a 45.44 per cent rise in net profit at Rs 701 crore in Q1FY20, against Rs 482 crore in the same period of the last financial year. 

The total loan book of the bank, which stood at about Rs 45,420 crore at the end of last quarter, grew 39.36 per cent. About 86 per cent of the loan book consists of microloans, said C S Ghosh, managing director and chief executive of Bandhan Bank.

Net Interest Margin (NIM) for the quarter ended June 30, 2019, stood at 10.45 per cent against 10.27 per cent in the corresponding quarter of the previous year.

The percentage gross non-performing asset (GNPA) to the total lending of the bank in the last quarter stood at 2.02 per cent, against 1.26 per cent in the same period last year. According to Ghosh, the higher GNPA was due to single exposure to IL&FS, which defaulted in its debt obligations, and if the account was excluded, the GNPA would be 1.11 per cent. The bank had made a provision of about Rs 385 crore against IL&FS in in September, he said.

The net NPA of the bank at the end of last quarter was 0.56 per cent, against 0.64 per cent in the same period of last financial year. 

Net Interest Income (NII) for the quarter grew by 36.07 per cent to Rs 1,411 crore, against Rs 1,037 crore in the corresponding quarter of the previous year.

Branch Expansion

Bandhan Bank’s board has approved opening 187 more branches and 340 doorstep service centres (DSCs) this year. At present the total branch count stands at 999, while the total number of DSCs is 3014. 

Last year, the Reserve Bank of India (RBI) had barred Bandhan Bank from opening new branches without its approval and ordered the bank to freeze the Ghosh's salary at existing level over its failure to meet shareholding rules. Earlier this year,  the bank announced plan to merger of Gruh Finance with it, which would reduce promoters’ stake to  61 per cent from the current 82 per cent. The RBI mandates the promoters’ stake to be at 40 per cent.

Ghosh said, at the next stage of expansion, the bank will focus on pan India expansion, and most of the new DSCs and branches would be outside the east of north east. Out of 340 DSCs planned to be opened this year, more than 100 will be in south, while the rest being spread over central and north India and Rajasthan. 

“The Gruh portfolio will help us balance the secured and unsecured lending book ad also help in widening the  geographical spread of the bank, as about 70 per cent of Gruh’s operations are concentrated in Gujarat and Maharashtra, where Bandhan Bank has a lesser reach,” said Ghosh.