Bandhan Bank conducted a concall on 14 July 2023 to discuss the financial results for the quarter ended June 2023 and prospects of the bank. Chandra Shekhar Ghosh, MD&CEO of the bank addressed the call:

Highlights:

The overall advances of the bank have grown 6.7%. The microfinance book declined 10% qoq.

Short-term loan against the fixed deposit to a single large account relating to government entity of Rs 2151 crore has been repaid in Q1FY2024 impacting loan growth.

The retail asset and commercial banking continued to record strong growth. The commercial banking registered a growth of 78% year-on-year.

Housing finance book which faced issues last quarter has come back to normal and has registered a growth of 9.5% yoy.

The share of secured assets in total loan book continues to increase and crossed 44% as against 36% last year. The bank expects the share of secured assets to rise to 50% by FY26.

The deposits growth at 16.6% yoy was higher than the industry growth rate of 12%. The retail to total deposits ratio continues to be above 71%.

The total number of liabilities customer increased 11.5% yoy and 3.4% qoq.

The overall digital transactions have recorded an increase of 49% yoy, with average digital transaction per account going up by 33%.

CASA was healthy 36% and bank aims to raise CASA ratio back to 40%.

Overall collection efficiency excluding NPA stood at 98% for Q1FY2024 up from 96% in Q1FY2023.

The bank has delivered RoA of 1.9% and RoE 14.4% in Q1FY2024.

This quarter the bank have added about 130 branches over 70% of which are in northern southern and western Europe

The bank have added about 7 lakhs new customer in this quarter

the bank have made considerable investments in people''s technology and infrastructure in recent years the bank expect that from The Current financial year the bank will start building positive results of this investment

The bank has initiated several steps to boost cross sell and grow the retail assets and liabilities portfolio and also to increase productivity for employees supported by digital and analytical initiatives.

The bank is targeting loan growth of over 20% and a little higher deposits growth for FY24.

The bank expects credit cost to remain around 2% +/- 20 bps for FY2024.

The bank had not classified stressed ECLGS loans of Rs 580 crore as NPA being guaranteed under NCGTC scheme. From April, the new norms required all such loans to be classified as NPAs, but bank is permitted not to make provisions against these exposures.

As a prudent and conservative measure, the bank has a coverage of 86% in terms of provision over these loans under NCGTC.

It has absolutely no impact on stress pool, as it was already classified as stress assets as part of SMA 2.

During the quarter, the bank had slippages of Rs 1360 crore of which about Rs 920 crore came from micro banking book, Rs 220 crore came from housing and the rest from the other businesses.

The slippages in the housing loan of Rs 220 crore were on account of new system implementation. The bank had immediate upgrades of Rs 160 crore.

The bank had sold a substantial pool to ARC and have also got a guaranteed repayment from NCGTC of 916 crore. As a result, any recoveries in those accounts the bank have to first pay to be NCGTC and ARCs as per the terms of agreement till their claims are satisfied.

Thus, the net recoveries to the bank in balance sheet is at Rs 280 crore, while gross recoveries stands at Rs 550 crore rest either goes to Arc or NCGTC.

Any further recovery towards this portfolio will flow to the bank and bank sees improving recoveries ahead.

The bank expects to recover the entire ECLGS loans in three to six months.

Out of the ECLGS exposure of Rs 580 crore at end March 2023, the bank has recovered Rs 85 crore in Q1FY2024.

The bank expects the slippage to reduce from Q2FY2024 onwards.

The overall provisions on the balance sheet stands at Rs 5725 crore.

The provision coverage in the SME loan book stands at 58%, retail is 45% and the housing is 40%.

The disbursements under ECLGS were close to Rs 4000 crore. The outstanding pool is less than Rs 600 crore which effectively means bank has close to 90%.

The bank is targeting NIM in the range of 7-7.3% for FY2024.

The bank is getting to raise the branch count to 1700 branches.

The outstanding restructured loan book stands at nil end June 2023.