Bandhan Bank Q2 net profit falls 5% to Rs 920 crore; NII rises 26%

 Private sector lender Bandhan Bank on Monday reported a 5.3 fall in net profit for the September quarter (Q2FY21) at Rs 920 crore due to additional provisions made for Covid-related uncertainties, even as it saw a robust 26 per cent growth in net interest income (NII). It had earned a net profit of Rs 971.8 crore in the corresponding period last financial year.

Sequentially, though, net profit was up more than 67 per cent. Also, the bank earned its highest pre-tax profit at Rs 1,233 crore in the reporting quarter, up 6.2 per cent.

NII was up almost 26 per cent to Rs 1,923 crore against Rs 1,539 crore in the corresponding period last financial year. Non-interest income, however, rose only 6 per cent to Rs 381.8 crore. Net interest margin (annualised) stood at 8 per cent against 8.2 per cent last year.

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Shares of the bank closed 4 per cent higher at Rs 300.85 on the BSE. The lender has set aside Rs 300 crore as additional provisions for standard assets this quarter. This takes the banks’ total additional provision to Rs 2,096 crore, which includes the additional standard asset provision for its micro-banking portfolio. “These provisions are higher than the minimum requirement by the RBI,” the bank said in its exchange notification. In the previous quarter (Q1FY21), the bank had made provisions of Rs 849 crore which included additional provision of Rs 750 crore for Covid-19.

Asset quality of the lender has improved both sequentially and year-on-year. Gross NPAs stood at 1.2 per cent in Q2FY21, compared to 1.4 per cent in the previous quarter and 1.8 per cent in the corresponding quarter last financial year. Similarly, net NPAs was down to 0.4 per cent.

If not for the Supreme Court’s interim order on a standstill in classifying accounts as NPA, the bank’s gross NPAs would have been 1.5 per cent.

“As the moratorium ended, coupled with a robust rural performance, we have seen an all-round improvement in collection, disbursement and deposits. On the deposits front, we have witnessed the best-ever quarter whereas on disbursement front, we are close to pre-Covid level,” said Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank.

Bandhan Bank opens 125 banking outlets after RBI lifts restrictions

Days after the Reserve Bank of India lifted restrictions on Bandhan Bank to open branches, the bank on Wednesday said that it has opened 125 banking outlets across 15 states. With this, the number of bank's branches stands at 1,013. The banking outlets also include doorstep banking units and home loan service centres. With the new addition, the total number of banking outlets now stands at 4,414. The bank has its presence across 34 of the 36 states and union territories in India.

Out of the 125 new banking outlets, 42 have been opened in Uttar Pradesh, 29 in Rajasthan, 12 in Madhya Pradesh, 7 each in Andhra Pradesh and Telangana, 6 in Bihar, 5 in Chhattisgarh, 4 in Orissa, 3 in Tamil Nadu, 2 each in Uttarakhand, Karnataka, Maharashtra, and Assam, and 1 each in Delhi and West Bengal.

Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank, said, "With the withdrawal of restriction on opening new branches, we will be able to expand business growth rapidly. In our four-and-a-half-year existence as a universal bank, we have been quick to identify opportunities of expanding distribution and setting up our presence.”

As of December 31, 2019, Bandhan Bank had 19 million customers, deposits worth Rs.54,908 crore and advances worth Rs.65,456 crore. The total business of the Bank stood at Rs.1,20,364 crore.

In 2018, RBI barred Bandhan Bank from opening new branches without its approval and ordered it to freeze Ghosh's salary at the existing level over its failure to meet shareholding rules. A few months back, Bandhan Bank completed the merger of Gruh Finance with it, which reduced promoters’ stake to 61 per cent from 82 per cent. According to RBI’s bank licensing guidelines, the bank’s promoter has to have a stake not more than 40 per cent within three years of commencing the business. The deadline for Bandhan Bank was on August 23, 2018.

Bandhan Bank stock nears all-time low, slips 27% thus far in 2020

Shares of Bandhan Bank slipped 7 per cent to Rs 370.60 on the BSE on Friday, thus erasing entire gain recorded since Tuesday after the Reserve Bank of India (RBI) lifted restrictions placed on the bank from opening new branches.

The private sector lender's stock was quoting close to its all-time low of Rs 369.15, touched on October 16, 2018. The bank issued shares at Rs 375 per share in its initial public offer (IPO) and debuted on the bourses on March 27, 2018. The stock touched an all-time high of Rs 741 on August 9, 2018.

With today’s fall, Bandhan Bank has tanked 27 per cent thus far in the calendar year 2020. In comparison, the S&P BSE Sensex was down 5 per cent during the same period.

The RBI had lifted the “regulatory restriction” on opening of branches by Bandhan Bank, provided the bank ensured at least a quarter of all banking outlets opened by it during a financial year were in unbanked rural centres, Bandhan Bank informed stock exchanges on Tuesday.

However, analysts have fundamental concerns on over-leverage in core markets of eastern India; inability to meaningfully diversify away from microfinance and concentration risk.

Bandhan Bank reported strong profitability, robust capitalisation, healthy resource profile supported by demonstrated ability to build up a retail deposit franchise and healthy reported asset quality over the past four years.

However, these strengths are partially offset by geographic concentration in operations and exposure to local socio-political risks inherent in the micro loan business, modest credit profile of borrowers and potential risk of regulatory strictures linked to non-dilution of promoter holding, rating agency Crisil said.

The bank's significant presence in East and North-East India regions exposes it to geographical concentration risk, inherent to the segment, it said.

At 01:51 pm, Bandhan Bank had partially erased its losses and was trading 3 per cent lower at Rs 387 on the BSE. In comparison, the S&P BSE Sensex was down 2.7 per cent at 38,668 points. The counter has seen huge trading volumes with a combined 8.1 million shares changing hands on the NSE and BSE so far.

Bandhan Bank to add 250 banking outlets by the end of this financial year

After the relaxation given by the Reserve Bank of India (RBI) to Bandhan Bank for opening branches, it is looking to add close to 250 banking outlets (including doorstep banking centres, or DSCs) in the next one month.

The relaxation comes a relief for the bank, as the restriction on branch expansion was a penalty for not meeting regulatory norms of maintaining promoters’ holding at 40 per cent.

“Through this letter, the regulator has now recognised the efforts of the bank towards compliance. That is one signal given to us. That has been taken as a strength of the bank,” said C S Ghosh, MD and CEO of Bandhan Bank. "We will add 250 more banking outlets by end of March 2020."

At present, the bank has a network of 1,100 branches and 3,084 doorstep banking centres. Between March 2019 and December 2019, it had opened 23 bank branches and 70 DSCs. Another 195 branches were added on account of merger with Gruh Finance.

In 2018, RBI had barred Bandhan Bank from opening new branches without its approval and ordered it to freeze Ghosh's salary at the existing level over its failure to meet shareholding rules. A few months back, Bandhan Bank completed the merger of Gruh Finance with it, which reduced promoters’ stake to 61 per cent from 82 per cent. According to RBI’s bank licensing guidelines, the bank’s promoter has to have a stake not more than 40 per cent within three years of commencing the business. The deadline for Bandhan Bank was on August 23, 2018.

Yesterday the bank said in a filing to the exchanges, “Further to our letter dated September 28, 2018, we would like to inform that the Reserve Bank of India vide its letter dated February 25, 2020 has informed that though the Bank is still not in compliance with the licensing condition on dilution, considering the efforts made by the Bank to comply with the said licensing condition, it has lifted the regulatory restriction on branch opening, subject to the condition that the Bank ensures that at least 25 per cent of the total number of 'Banking Outlets' opened during a financial year are opened in unbanked rural centres.”

At present about 35 per cent of the banking outlets of the bank are in rural areas, while another 35 per cent are concentrated in semi-rural areas.

Ghosh said, going forward, the bank would focus on affordable housing and MSME loan portfolios. The bank expects to have at least 50 per cent of its portfolio in the affordable housing and MSME segments in the next three years. At present, close to 61 per cent of the banks’ books consists of microfinance loans.

Bandhan Bank gains 5% as RBI lifts restrictions on opening new branches

Shares of Bandhan Bank rose as much as 5 per cent to Rs 423 on the BSE on Wednesday in intra-day trade after the Reserve Bank of India (RBI) lifted restrictions placed on the bank from opening new branches.

".. though the Bank is still not in compliance with the licensing condition on dilution, considering the efforts made by the Bank to comply with the said licensing condition, it (the RBI) has lifted the regulatory restriction on branch opening, subject to the condition that the Bank ensures that atleast 25 per cent of the total number of 'Banking Outlets' opened during a financial year are opened in unbanked rural centres," Bandhan Bank said in a regulatory filing.

The central bank had barred Bandhan Bank in September 2018 from expanding its network as the lender had failed to reduce promoter stake to 40 per cent from close to 82 per cent within the stipulated three years from the time of commencing operations. Bandhan Bank had commenced operations on August 23, 2015. At present, promoters' holding in the bank is 62 per cent.

According to RBI's bank licence norms, a private sector bank's promoter needs to pare holding to 40 per cent within three years, to 20 per cent within 10 years, and to 15 per cent within 15 years.

Bandhan Bank currently has 4,288 banking outlets, including branches.

In the past four months, Bandhan Bank has underperformed the market by falling 32 per cent against 3 per cent rise in the S&P BSE Sensex till Tuesday. The stock hit 52-week low of Rs 402 yesterday

At 9:47 AM, the stock was trading 1.52 per cent higher at Rs 410 as compared to 0.7 per cent decline in the benchmark S&P BSE Sensex. A total of 26.4 lakh shares have changed hands on the NSE and BSE combined so far.

Bandhan Bank declines 3%, hits fresh 52-week low; down 37% from Oct high

Shares of Bandhan Bank were trading lower for the third straight day, slipping 3 per cent intra-day to hit its 52-week low of Rs 411, on the BSE on Wednesday. The stock of the private sector lender was trading at its lowest level since February 5, 2019.

In the past three months, Bandhan Bank has underperformed the market by falling 27 per cent, as compared to a 2 per cent rise in the S&P BSE Sensex. It has slipped 37 per cent from its 52-week high level of Rs 650, touched on October 29, 2019.

While announcing the October-December quarter (Q3FY20) results on January 14, Bandhan Bank said that during the quarter it made additional provision of Rs 200 crore on standard advances in microfinance portfolio after evaluating risk observed in certain areas of a north-eastern state, though having a dwindling effect.

"Overall, results were largely on expected lines. However, the next 3 months would be critical in terms of portfolio performance both in Assam and West Bengal," analysts at JP Morgan said in result update.

The foreign brokerage firm further said Bandhan Bank’s entrenched franchise as the lowest-cost loan provider in high-yield MFI business in East India, ability to mobilize deposits (especially CASA) in a short period of time post Bank conversion, and our forecast of sector-high loan growth in the med-term are key investment positives.

"However, these strengths are partially offset by geographic concentration in operations and exposure to local socio-political risks inherent in the micro-loan business, modest credit profile of borrowers and potential risk of regulatory strictures linked to non-dilution of promoter holding," rating agency CRISIL had said on January 6.

Over 60 per cent of the bank's microfinance loan portfolio is concentrated in East and North-East India and about 40 per cent of its microfinance borrower base is in West Bengal alone. As borrowers have modest credit risk profiles with limited access to formal credit, variability in their income streams leading to pressure on their cash flow may affect their repayment capability, and hence, the bank's performance.

Furthermore, complying with regulatory requirement on the promoter's stake dilution, although partially addressed by Gruh's amalgamation with Bandhan, and the mode of further stake sale remain key monitorables, it added.

Bandhan Bank trades near 3-month low; slips 21% thus far in December

Shares of Bandhan Bank continued to reel under pressure, falling for the fourth consecutive day, on the BSE on Wednesday. The stock declined 5 per cent at Rs 457 in the intra-day trade today.

The stock of the private sector lender was down 21 per cent thus far in the month of December. In comparison, the S&P BSE Sensex was up 1.5 per cent. It was trading at its lowest level since September 20, 2019.

With today’s fall, the stock has fallen 30 per cent from its all-time high level of Rs 650 touched on October 29. Prior to that, between July 24 and October 15, it had rallied 42 per cent, as against a 1.7 per cent rise in the benchmark index.

Geographically, Bandhan Bank is highly concentrated in the eastern and north-eastern regions of India, specifically West Bengal and Assam, which accounts for a major share of its advances. According to rating agency ICRA, the bank is exposed to event risks and economic conditions in these geographies as 62 per cent of its branches are located in the region.

"Even as the bank expands its operations to 34 states and Union Territories (UTs), the geographical diversification will take time because of the large vintage existing customer base in the eastern and north-eastern regions of India," ICRA said while assigning credit ratings to the bank’s instruments with ‘stable’ outlook.

“The ratings remains constrained by the marginal borrower profile of microfinance borrowers and is also vulnerable to political appeasement, which might result in asset quality risks,” it added.

"Apart from technical supply pressures on the stock from mandatory requirement of promoter stake sale from 61 per cent to 40 per cent required immediately, we also have fundamental concerns on over-leverage in core markets of eastern India; inability to meaningfully diversify away from microfinance and concentration risk", analysts at Macquarie Research said in October note.

At 11:55 am, Bandhan Bank partially erased its early morning loss and was trading 1.5 per cent lower at Rs 473 on the BSE. The S&P BSE Sensex was up 0.18 per cent at 41,428-mark. The counter has seen huge trading volumes with a combined 4.8 million equity shares changing hands on the NSE and BSE so far.

Bandhan Bank fined Rs 1 crore for not bringing down promoter stake

The Reserve Bank of India (RBI) has imposed a fine of Rs 1 crore on Bandhan Bank for not bringing down the promoters’ stake in the bank to 40 per cent in the stipulated time period.

“This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank,” the RBI said in a release.

The private lender was supposed to bring down the shareholding of its non-operative financial holding company, Bandhan Financial Holdings, in the bank to 40 per cent within three years of commencement of business of the bank.

Bandhan Bank, Gruh Finance trade firm ahead of record date for amalgamation

Shares of Bandhan Bank and Gruh Finance rallied by up to 9 per cent on the BSE on Tuesday ahead of record date for scheme of amalgamation.

Shares of Gruh Finance will turn ex-date on Wednesday for the proposed amalgamation with Bandhan Bank.

The board of directors of Bandhan Bank and Gruh Finance had fixed Thursday, October 17, 2019 as the record date, following the effectiveness of the scheme, for the purposes of determining the shareholders of the company who shall be entitled to receive shares of Bandhan Bank. The share swap ratio for the amalgamation was fixed at 568 shares of Bandhan Bank for every 1,000 shares of Gruh Finance.

The National Company Law Tribunal (NCLT) on September 18 cleared the scheme of amalgamation between Kolkata-based Bandhan Bank and Ahmedabad-based Gruh Finance.

Among the individual stocks, Bandhan Bank surged 9 per cent to Rs 618 on the BSE. The stock of private sector lender was trading close to its 52-week high level of Rs 636 hit on May 3, 2019. Gruh Finance soared 6 per cent to Rs 324 in the intra-day trade on the BSE. In comparison, the S&P BSE Sensex was up 0.58 per cent at 11:16 am.

In the past two weeks, the stock of Bandhan Bank has zoomed 31 per cent as compared to a 0.38 per cent rise in the S&P BSE Sensex. The stock will be added to the MSCI’s Global Standard Index with effect from October 16. The inclusion is the effect of the merger between Bandhan Bank and Gruh Finance.

Bandhan Bank slashes interest rate on micro loans by 70 bps to 17.95%

Bandhan Bank on Monday said it has slashed the interest rate on micro loans by 70 basis points to 17.95 per cent.

The revised rate will be applicable to new disbursements from Tuesday, the bank said in a statement.

In the last four years since it began operations as a bank, the lender has cut micro loan rates by 445 basis points or 4.45 per cent.

"I believe, with the reduction in micro loan interest rate, more people will find it affordable to borrow money and build sustainable livelihoods for themselves," Bandhan MD amd CEO Chandra Shekhar Ghosh said.

Bandhan Bank has a network of 998 branches and 481 ATMs across the country.

As on March 31, the bank's loan book stood at Rs 44,776 crore with deposits of Rs 43,232 crore.