BANDHANBNKNSEQ4FY25May 07, 2025

Bandhan Bank Limited

9,518words
100turns
9analyst exchanges
5executives
Management on call
Partha Pratim Sengupta
- MANAGING
Ratan Kumar Kesh
EXECUTIVE DIRECTOR
Rajinder Kumar Babbar
EXECUTIVE
Rajeev Mantri
CHIEF FINANCIAL OFFICER – BANDHAN BANK LIMITED
Vikash Mundhra
HEAD, INVESTOR
Key numbers — 40 extracted
rs,
n I'll share our strategic vision for the next 2 to 3 years. As we've discussed in previous quarters, the microfinance sector has faced significant stress, and the overall liquidity tightness in the s
INR 11,491 crore
delivered a reasonably strong performance. A snapshot of the same is (a) Net Interest Income was INR 11,491 crore a growth of 11%; (b) Net Total Income was INR 14,458 crore a growth of 16%; (c) Operating profit
11%
performance. A snapshot of the same is (a) Net Interest Income was INR 11,491 crore a growth of 11%; (b) Net Total Income was INR 14,458 crore a growth of 16%; (c) Operating profit was at INR 7,389
INR 14,458 crore
he same is (a) Net Interest Income was INR 11,491 crore a growth of 11%; (b) Net Total Income was INR 14,458 crore a growth of 16%; (c) Operating profit was at INR 7,389 crore a growth of 11%; (d) Profit after ta
16%
ncome was INR 11,491 crore a growth of 11%; (b) Net Total Income was INR 14,458 crore a growth of 16%; (c) Operating profit was at INR 7,389 crore a growth of 11%; (d) Profit after tax was at INR 2,7
INR 7,389 crore
of 11%; (b) Net Total Income was INR 14,458 crore a growth of 16%; (c) Operating profit was at INR 7,389 crore a growth of 11%; (d) Profit after tax was at INR 2,745 crore a growth of 23% YoY; and (e) RoA of
INR 2,745 crore
of 16%; (c) Operating profit was at INR 7,389 crore a growth of 11%; (d) Profit after tax was at INR 2,745 crore a growth of 23% YoY; and (e) RoA of 1.5% and RoE of 11.6% for the full year. Now, let’s turn to
23%
t was at INR 7,389 crore a growth of 11%; (d) Profit after tax was at INR 2,745 crore a growth of 23% YoY; and (e) RoA of 1.5% and RoE of 11.6% for the full year. Now, let’s turn to the broad numbe
1.5%
a growth of 11%; (d) Profit after tax was at INR 2,745 crore a growth of 23% YoY; and (e) RoA of 1.5% and RoE of 11.6% for the full year. Now, let’s turn to the broad numbers for Q4. As of March 31,
11.6%
; (d) Profit after tax was at INR 2,745 crore a growth of 23% YoY; and (e) RoA of 1.5% and RoE of 11.6% for the full year. Now, let’s turn to the broad numbers for Q4. As of March 31, 2025, our advance
INR 1.37 lakh crore
. Now, let’s turn to the broad numbers for Q4. As of March 31, 2025, our advances book stood at INR 1.37 lakh crore, reflecting a year-on-year growth of 10%. On the deposits side, deposits have reached INR 1.51 la
10%
rch 31, 2025, our advances book stood at INR 1.37 lakh crore, reflecting a year-on-year growth of 10%. On the deposits side, deposits have reached INR 1.51 lakh crore, showing a YoY growth of 12%, wh
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Guidance — 20 items
Vikash Mundhra
opening
“However, I’d like to note that recent regulatory and monetary actions have been positive, and we expect to see gradual steady improvement in the MFI segment in the coming few months.”
Vikash Mundhra
opening
“our guidance, we remain encouraged by the continued resilience across key operational metrics.”
Vikash Mundhra
opening
“I am pleased to report that for the full year FY25, we delivered a reasonably strong performance.”
Vikash Mundhra
opening
“We aim to expand our asset book with an improved secured mix, enhance asset quality, and continue investing in technology to elevate both customer experience and operational efficiency.”
Vikash Mundhra
opening
“Given the current macro-economic environment, we are targeting an advances growth of 15– 17% CAGR over the next three years, with a strategic focus on increasing the secured mix.”
Vikash Mundhra
opening
“We expect secured advances to constitute over 55%+ of the total advances by FY27.”
Vikash Mundhra
opening
“While both the secured portfolio and the EEB book are expected to grow, the secured book will grow at a relatively higher pace.”
Vikash Mundhra
opening
“The growth trajectory of the EEB portfolio will be aligned with prevailing economic conditions.”
Vikash Mundhra
opening
“Leveraging the capabilities of our 1,715 branches and nearly 4,594 BUs, we aim to deepen our reach and mobilize more granular deposits.”
Vikash Mundhra
opening
“As a result, we anticipate some moderation in margins over the coming years on a risk adjusted basis.”
Risks & concerns — 15 flagged
As we've discussed in previous quarters, the microfinance sector has faced significant stress, and the overall liquidity tightness in the system has impacted both growth and profitability at an industry level.
— Vikash Mundhra
Despite heightened stress in the MFI segment during the second half of the year—resulting in elevated credit costs and moderate growth - the Bank navigated these challenges with resilience and focus.
— Vikash Mundhra
Additionally, we’ve effectively managed our funding mix by containing bulk deposits to 31% of total deposits, further reducing concentration risk and enhancing balance sheet resilience.
— Vikash Mundhra
As previously communicated, in Q1FY25, the Bank adopted a conservative approach by increasing the risk weight on the EEB (Emerging Enterprise Business) portfolio from 75% to 125%, which led to a 362-basis point reduction in our overall capital adequacy ratio.
— Vikash Mundhra
However, in February 2025, the RBI clarified the risk weight norms, reducing them to 100% or 75% for MFI loans based on certain eligibility criterion.
— Vikash Mundhra
Our focus will remain on sound risk management, exploring new growth avenues, and continuing to enhance operational efficiency.
— Vikash Mundhra
Additionally, we’re rolling out state-of-the-art Digital Banking Units and integrating emerging technologies like QR codes, WhatsApp banking, and facial recognition to boost customer convenience, operational efficiency, and risk management.
— Vikash Mundhra
Guided by a clear roadmap that embeds risk management and compliance into every facet of our operations, we remain optimistic about unlocking greater value for all our stakeholders.
— Vikash Mundhra
As a result, we anticipate some moderation in margins over the coming years on a risk adjusted basis.
— Vikash Mundhra
The EEB portfolio saw a decline of 9% year-on-year, although there was a marginal increase of 1% quarter-on-quarter, reaching INR56,544 crores.
— Rajeev Mantri
This decline is primarily due to portfolio controls we implemented in response to the elevated risk in the microfinance industry.
— Rajeev Mantri
CASA deposits stood at INR47,437 crores, reflecting a 5% year-on-year decline, but an increase of 6% quarter-on-quarter.
— Rajeev Mantri
It is important to note that while CASA deposits have shown a year-on-year decline on a period-end basis, on an average basis, CASA deposits have experienced a marginal growth on a year-on-year basis.
— Rajeev Mantri
Coming to the quarterly profit and loss: The net interest income for Q4FY25 stood at INR2,756 crores, marking a 4% year-on-year decline.
— Rajeev Mantri
The sequential and year-on-year drop in NII was primarily driven by a shift in the advances mix towards secured products and the impact of elevated slippages as well as the risk in the microfinance segment, as a result of which the microfinance segment growth was lesser compared to the last year.
— Rajeev Mantri
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Q&A — 9 exchanges
Q
A couple of bookkeeping questions. So what will be our proportion in Karnataka and Tamil Nadu as a percentage of advances? Partha Pratim Sengupta: So Tamil Nadu, we have a share of only less than 1% of advances and Karnataka is 1.1%. So both are very negligible. And the DPD book is also very low. And I would say the collection efficiency is also around 97% in these 2 states. So we are not that much impacted into whatever is happening in both the states.
Rajeev Mantri
And these are the percentages of total EEB advances. Partha Pratim Sengupta: Yes. And number two is that you have seen that in both the states, the regulations have excluded the banks. The banks are not a part of the regulation. So of course, this will have some, I would say, impact on the people or the borrowers there, but in general, the other regulatory measures are not applicable for us (banks). Got it. And secondly, what will be our fixed book percentage? Are you talking about fixed rate book? Yes, fixed rate. It's around 55%. 55% of our loan book is around fixed rate.
Q
Congrats on the quarter in these turbulent times. Just a few questions. Firstly, on interest reversal, what was the interest reversal this quarter versus a similar number in 4QFY24?
Rajeev Mantri
Sorry, could you repeat that question? Interest reversal. Interest reversal, Rajeev, for the quarter. Yes. Give us a couple of minutes. We'll come back on this question. Okay, sure. And secondly, what sort of impact do we expect on our deposit cost after this rate cut we've done on SA. As well as, overall, we are seeing term deposit rates for the system, wholesale and retail, going down. Can you guide us to some sort of cost of deposits for FY26? Partha Pratim Sengupta: Yes. So we have also reduced our interest rates on both savings bank and term deposits. So the rationalization has already be
Q
Sir, my first question is with regard to the SMA book for the EEB portfolio. If I'm looking at West Bengal, this quarter, we are seeing a slight increase there in the SMA-0 bucket. So what can be the particular reason behind that? And also considering the fact, in the month of April, there have been some disturbances in some districts of West Bengal. So how adversely has it further been affected by it? Partha Pratim Sengupta: One is because of the holidays. The last 3 days were holidays in West Bengal, as you all know. So whatever the demand raised during this period, the borrowers could not p
Mohit Jain
Sir, the trend we are seeing in the current month because of some -- there were some media reports that in some districts there were some kind of disturbances. So any effect it is having on our collection efficiency? Partha Pratim Sengupta: Murshidabad district. So Murshidabad District, has 4% NPA. As of April, about 88% of accounts are regular. The SMA-0 accounts make up 6%, while SMA-1 and SMA-2 accounts are 1% each. Currently, the total outstanding is INR 2,151 crores, with only INR 91 crores classified as NPA. The total delinquency book is very small. Okay. And sir the other question which
Q
I have a couple of questions on the EEB book. So just circling back to Slide 19, where you have shown the West Bengal, Assam and rest of India collection efficiency. Just wanted to understand which are your worst performing states, which are dragging down your collection efficiency to 98.2%. So that's the number one question. Number two, in terms of disbursal rates, I get the INR5,000 crore number. But in terms of month or quarter, when do we expect we getting back to a normalized disbursal level during the year? Those are my 2 questions.
Vishal Wadhwa
To answer your first question, our states which are not performing the way performance has happened in the Eastern part are Maharashtra, parts of Gujarat, and Tamil Nadu and Karnataka, which is small for us. These are 3-4 states which are not doing well; parts of Gujarat and Tamil Nadu and Karnataka. On the second question, I think the first quarter is going to be a muted one. And I think quarter 2 onwards, the disbursal should pick up. But by the end of quarter 3, I think we will have, hopefully, a normal year -- quarter the way it was there prior to a couple of years, and that should stabili
Q
Sir, just a question on this West Bengal again. You kind of indicated, what is the current month performance as we speak? Your gave a number. I just wanted to clarify.
Rajeev Mantri
On the collection efficiency -- sorry, which parameter? No. The SMA-0, 1, and 2. I think you had mentioned a number that the performance had improved in April. Just trying to check what was the comment on that? Partha Pratim Sengupta: April number... Obviously, there is still a month to get closed. So we have still collections going on... Partha Pratim Sengupta: But I can tell you, 2 days back, the slippages percentage has actually come down. So almost I am having a positive of around -- marginal positivity there compared to March. But Mahesh, if you look at the SMA position as at March end co
Q
A few questions. First on capital, sir. So have we taken the full impact of RWA decline? Or is there some loan book where the lower risk weights are yet to be applied?
Rajeev Mantri
Yes. So maybe I'll take that, Jai. Rajeev here. So as you've seen the RBI clarification, the circular came through in February '25. And as part of which we have assessed and we have looked at -- and a large part of our EEB book, which is both across group lending and as well as SBAL sort of fulfils the criteria which I mentioned, and we have been able to take the benefit of that in the RWA calculation. We are cognizant of the change that is coming from 1st April, which is for lending to NBFCs. And I think that should give some further benefit to the RWA calculation. That's not yet included in
Q
So my question is mainly on looking at next year, right? So we've given guidance for the next 2 to 3 years. But if we look at next year specifically, would it be reasonable to say that ROA will be under pressure because of what I heard on basically that we are investing, so operating...
Partha Pratim Sengupta
I have told you very clearly, if you look into the current year, Q1, Q2 was good. Q3, Q4 was comparatively bad for the year. And overall ROA, we have maintained at 1.5%. So this year, it is just the reverse. Q1, Q2 will be a little bit bad, but Q3, Q4, we are expecting to be good. Yes, sir. Sir, but at the same time, in the first 2 quarters, our operating profit profile was way higher. And it looks like it has reduced quite significantly, right? So is this... Partha Pratim Sengupta: Q1, Q2 of this quarter was quite good. So operating profit, income, EEB loan book, everything was quite good for
Q
I just wanted to know what is the yield on our microfinance portfolio and non-microfinance portfolio currently?
Rajeev Mantri
I think the differential between the two yields is roughly around 10%. So EEB is I think around or upwards of 20%. Partha Pratim Sengupta: Yes, 20% and 10%. Okay. And the other part was that what has led to the negative tax in this quarter? Yes, I can clarify that. So as part of the review of the tax, I think there are 2 aspects that we have accounted for. One is what we call as the deferred tax asset on the ESOP. So as you recollect, in the last quarter, we had an accounting impact on ESOP close to around INR166 crores. And as part of the accounting review, I think the deferred tax asset on t
Q
Thank you all for joining in. Thank you very much.
Management
Speaking time
Rajeev Mantri
28
Moderator
11
Piran Engineer
10
Vishal Wadhwa
10
Jai Mundhra
7
Partha Pratim Sengupta
6
Mohit Jain
5
Anand Swaminathan
5
M.B. Mahesh
5
Param Subramanian
5
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Opening remarks
Vikash Mundhra
Thank you, Sejal. Good evening everyone, and a warm welcome to all the participants. It's a pleasure to have you with us today as we discuss Bandhan Bank's business and financial performance for the quarter and the full year ending March 2025. We sincerely appreciate your time and participation. Today, we will take this opportunity to provide insight into our operational activities, significant achievements and challenges, as well as offer perspective on market conditions, strategic initiatives and any notable changes in our business environment. To walk you through all these details, we are joined by Mr. Partha Pratim Sengupta, Managing Director and CEO; Mr. Ratan Kumar Kesh, Executive Director and Chief Operating Officer; Mr. Rajinder Kumar Babbar, Executive Director and Chief Business Officer; Mr. Rajeev Mantri, Chief Financial Officer; myself, Vikash Mundhra, Head of Investor Relations; and our senior management team at Bandhan Bank. We are happy to answer any questions or provide
Rajeev Mantri
Thank you, Sengupta sir, and welcome again, everyone, to the earnings call. Now let's move on to the business performance for the quarter. I'll walk you all through the key financial highlights and provide an overview of how we have performed. Let's start with the advances. As of March 2025, gross advances stood at INR1.37 lakh crores, reflecting a growth of 10% year-on-year and 4% quarter-on-quarter. In line with our strategic plan of product diversification, we are focused on growing the share of our secured book across housing, wholesale banking and retail assets. The secured book grew by 32% year-on-year and now represents 50.5% of the total advances, marking a significant shift towards a more secure and diversified portfolio. The EEB portfolio saw a decline of 9% year-on-year, although there was a marginal increase of 1% quarter-on-quarter, reaching INR56,544 crores. This decline is primarily due to portfolio controls we implemented in response to the elevated risk in the microfin
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