Bandhan Bank Q2FY21 results: Key highlights from the company's earnings concall

Management Participants: Chandra Shekhar Ghosh- MD & CEO

Overall collection efficiency for the bank in the September was 92 percent. The collection efficiency in the micro-banking or the emerging entrepreneurs business was around 89 percent and in October it has improved to 91 percent. In October, 95 percent of the emerging entrepreneurs business customers have started paying and management believes within 90 days they will be back to normal collection efficiency, the management said.

Collection efficiency in Assam for the bank is around 86-87 percent in terms of value and 88 percent in terms of customer. Once the trains becomes operational bank expects around 5 percent improvement in collection efficiency.

According to the management of Bandhan Bank, the bank will look to open 574 new banking outlets across the country by the end of the year out of which major is coming from South, North and West. About 100 of the outlets will be full-fledged branches and remaining will be small branches or micro banking unit. Bank is also looking to expand the housing verticals in GRUH by opening more banking outlets. The employees hiring for the purpose has been done and the branch addition will be done over the quarter.

The bank has total COVID-19 provision of Rs 2,069 crore. It expects the ratio of EEB or Micro banking business to be around 30 percent of the total advance and housing vertical to be 30 percent of the total advance in next five years. In housing segment loans will be divided into two parts that’s is micro housing loans and prime housing loans, another 30 percent would be commercial banking and Retail loans segment is expected to be about 10 percent in next five years, it said.

Average ticket loan size in the housing segment is expected to increase which will help in growth in the medium term. ROE profile would be slightly affected as they will be focusing on the prime segment as well but micro segment is expected to balance it. Percentage of top-up loans stands at 7.6 percent in terms of value and and 12.3 percent in terms of customers in the EEB book. Average ticket size of top up loans that bank has given is around Rs 35,000.

Bank had estimated 3.5 percent credit cost for the pandemic and if the customer payments continue as they are they don’t feel to make additional provisions. Bank has already provided 2.8 percent for now. The bank expects next two quarters to be good in terms of growth, the management said.

Write off in the micro-loan book during the quarter was Rs 109.21 crore. Around 63 percent of the saving bank customers have saving bank deposit of more than 1 lakh. West Bengal contributes about 47 percent, Assam contributes close to 17 percent and Bihar contributes around 9 percent and Maharashtra is around 12 percent to the total AUM, it said.

In the commercial banking there are various segments like Big SME where the average ticket of Rs 2 crore, small enterprise loan which has average ticket size of Rs 3.5 lakhs and small SME segment which has average ticket size of Rs 30 lakhs, the management said.