Capitaline

Analyst Meet / AGM 18-Jul-18

Conference Call

Bandhan Bank

Expects cost-to-income ratio at 35% and credit cost at 1% for FY2019

Bandhan Bank conducted a conference call on 18 July 2018 to discuss the financial performance for quarter ended July 2018. Chandra Shekhar Ghosh - MD&CEO of the bank addressed the call:
Highlights:

The bank has posted robust 48% growth in the net profit to Rs 482 crore in Q1FY2019 with 40% growth in the net interest income to Rs 1037 crore for the quarter.
Deposit portfolio of the banks jumped 37% yoy to Rs 30703 crore end June 2018, while declined from Rs 33896 crore end March 2018. The bank has reduced bulk deposits by Rs 3000 crore in Q1FY2019 after capital raising.
The bank has posted strong 84% growth in CASA deposits to Rs 10887 crore, helping to improve CASA deposits ratio to 35.5% from 34.3% a quarter ago and 26.3% a year ago. The retail deposits accounted for 80% of overall deposits end June 2018 compared with 75% end June 2017. About 6% of the deposits were contributed by microfinance customers.
The average cost of SA deposits for the bank stood at 5.1% end June 2018.
Loan book of the bank has jumped 52% to Rs 32590 crore end June 2018, driven by 45% growth in the micro credit to Rs 27970 crore, while non-micro credit loan portfolio has more than doubled to Rs 4620 crore end June 2018 from Rs 2069 crore end June 2017.
The share of micro credit in overall loan book has declined to 85% end June 2018 from 86% end March 2018 and 90% end June 2017.
The bank has improved net interest margin on sequential basis to 10.3% in Q1FY2019 from 9.3% in Q4FY2018.
The bank has acquired 7 lakh new customers in Q1FY2019, of which 3 lakh were acquired through 937 bank branches and 4 lakh customers were acquired in the micro credit business.
The number of active borrowers of the bank has increased to 80.8 lakh end June 2018 from 78.3 lakh end March 2018. About 72% of the micro loan borrower has been extended only one loan.
The bank has network of 937 branches and 2764 Doorstep Service Centers (DSCs), comprising to 3701 banking outlets which is the third highest level of banking outlets in the private bank sector. The bank proposes to raise its distribution network to 4000 banking outlets by March 2019, consisting of 1000 branches and 3000 DSCs.
The credit cost for the bank stood at 1.51% in FY2018, while the bank targets credit cost at 1% for FY2019.
About 95% of the loan book of the bank is Priority Sector Loan (PSL) compliant, which is helping the bank to sale PSL certificate contributing fee income. The bank has recognized income of Rs 256 crore from sale of Rs 20000 crore of PSLCs, which is to be recognized over four quarters and booked Rs 64 crore in Q1FY2019.
The bank has improved cost-to-income ratio to 34.3% in Q1FY2019 from 35% in FY2018. The bank expects to maintain cost-to-income ratio at 35% in FY2019, while continuing to invest in new products, new technology and network expansion.
The bank has arrested the GNPA ratio at 1.26% end June 2018, while the repayment rate for micro loans was healthy at 98.9% end June 2018.
The gross NPAs of the bank stood at Rs 388 crore end June 2018, of which Rs 370 crore were contributed by the micro loans segment.

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