The bank made Rs 1,280 crore provisions in the September quarter against Rs 5,614 crore in the year-ago period. Net interest income rose 13.3% to Rs 2,193 crore.
The latest quarter provisions were, however, double the provisions made in the preceding quarter, which led to a 76.4% fall in net profit sequentially.
The bank’s net interest margin fell to 7% against 7.6% in the comparable quarter last year, due to Rs 298 crore of interest rate reversal on the restructured accounts, which slipped into sticky loans.
“The NIM is slightly lower than our comfort zone of 7.5-8%,” managing director Chandra Shekhar Ghosh said, expressing optimism about improvement in the key ratio in the next few quarters as the pandemic-led stress is phasing out.
Write-off of ageing bad loans to the tune of Rs 3,535 crore also impacted the NIM adversely in the quarter under review. The bank wrote-off a total of around Rs 5,700 crore of delinquent loans in two-phases after the pandemic.
The latest write-offs are entirely from the microfinance books, leading the loan portfolio to shrink to Rs 53,920 crore at the end of September from Rs 58,100 crore three months prior to that. Consequently, the share of unsecured micro loans fell to 40% of total loans from 57% earlier.
The bank’s September quarter operating profit was 2% year-on-year lower at Rs 1,553 crore.
Ghosh said the focus has shifted to growth with stress slowing down. He said the impact of festive season demand for bank loans was seen early this time, helping the credit grow 17.4% to Rs 95835 crore. The growth in housing loans and other retail business helped the credit expansion.
Ghosh is expecting 22-25% credit growth for the entire fiscal.
The bank’s asset quality improved with gross non-performing assets ratio falling to 7.19% at the end of September from 7.25% three months back and from 10.82% seen a year ago. Bandhan is planning to launch its own credit card next fiscal.