Micro loans-focussed Bandhan Bank on Thursday reported 14 per cent decline in December quarter net profit at Rs 632.59 crore as provisions more than trebled.
The bank also flagged concerns over the impact of a recent law on MFI loans in poll-bound Assam, which constitutes 8 per cent of its overall book, saying the loan collections have suffered in the last fortnight and it will be cautious while extending new loans.
The bank's core net interest income grew 34 per cent to Rs 1,541 crore on the back of a widening in net interest margin to 8.3 per cent from 7.9 per cent and 22.6 per cent growth in loan book. The other income grew handsomely to Rs 553.28 crore from Rs 357 crore in the year-ago period.
The operating profit registered 51 per cent growth at Rs 1,914 crore during the quarter, but it was the provisions which hit the bottomline.
The total provisions of Rs 1,068 crore (which were Rs 294 crore in the year-ago period) included Rs 1,000 crore regarding the ones related to COVID-19.
Its chief financial officer Sunil Samdani said the overall credit costs due to COVID-19 will come at 5 per cent of the advances as against the earlier estimate of 3.5 per cent but added that part of the money was already set aside in March 2020 quarter.
It reported gross non-performing assets ratio of 1.11 per cent, but if it were to include loans overdue which did not get recognised due to the Supreme Court standstill and on a proforma basis, the same number would have been at 7.12 per cent.
The bank, however, said that because of the nature of the business, it is confident of better show.
Its chief executive and managing director C S Ghosh told reporters that the overall collection efficiencies which had risen to 92 per cent as of December 31, from 88 per cent in September, have gone down to 90 per cent in the last fortnight because of repayment troubles in Assam.
He said the demand for loans continues in the north eastern state but the bank will be conservative about new lending, and added that it feels the situation will be challenging for the next 2-3 months.
On the positive side, he said people are now concerned about their credit scores and have a tendency not to default because of the repercussions in the future.
Usually, bank's credit growth and also repayments show an increase in the last quarter of a year, Ghosh said, without giving a target at which he sees the collections ratio by March.
Its overall capital adequacy stood at 26.17 per cent as of December 31, 2020.
The Bandhan Bank scrip closed 4.02 per cent down at Rs 345.40 on the BSE, as against a 0.34 per cent correction on the benchmark.
