Bandhan Bank profit falls 80 per cent in January-March quarter as provisions spike

The bank wrote off Rs 1,929 crore of loans, a bulk of them in the microfinance segment, in the March quarter because it wanted to start the new fiscal with a clean balance sheet.
For representational purposes (File | Reuters)
For representational purposes (File | Reuters)

NEW DELHI:  Bandhan Bank has seen a steep 80 per cent decline in its net profit in the January-March quarter as the microfinance lender nearly doubled its provisions to cover asset quality risks. Net profit came in at Rs 103 crore compared with Rs 517 crore last year.

The bank wrote off Rs 1,929 crore of loans, a bulk of them in the microfinance segment, in the March quarter because it wanted to start the new fiscal with a clean balance sheet.

As a result of the accelerated write-off, the overall provisions shot up to Rs 1,594 crore from Rs 827 crore in the year-ago period, directly impacting the bottomline.

According to Sunil Samdhani, chief financial officer, Bandhan Bank the performance of the last 3-6 months was assessed before taking a call on the write-offs, and it was found that most of these accounts are contact-based businesses like beauty parlour, gym, school bus owner.

The bank had restructured less than Rs 200 crore of advances in the year-ago period, and most of the loans which were written-off in the reporting quarter were microloans.

Bandhan Bank also restructured loans worth Rs 617 crore of advances on account of the Reserve Bank of India’s one time restructuring scheme.

“We have only restructured home loans from our home loan book, have not restructured any loans from the microfinance portfolio,” said Chandrashekhar Ghosh, MD & CEO.

The bank’s collection efficiency stood at 95 per cent as of March as compared with 92 per cent as of December 2020. 

The gross non performing assets ratio improved to 6.8 per cent as against 7.1 per cent in December, including the proforma NPAs.

Total advances rose 21 per cent to Rs 87,043 crore, which included microfinance loans worth Rs 58,350 crore. Mortgages as of March contributed Rs 20,210 crore, up 8.8 per cent year-on-year. 

Related Stories

No stories found.
The New Indian Express
www.newindianexpress.com