Neha Dave Moneycontrol Research
Bandhan Bank has delivered another quarter of impressive performance. Net profit growth number looked optically subdued at 10 percent YoY as the bank made full provision of Rs 385 crore for IL& FS exposure during the quarter.
The lender's advances book grew at an accelerated pace of 46% YoY in Q3, increasing to Rs 35,599 crore.
In a short span of three years after receiving the banking license, Bandhan has built a formidable deposit franchisee. The growth in current and savings account deposits (CASA) at 71% YoY outpaced the bank’s total deposits growth of 37% YoY as at end December, 2018. Consequently, bank’s CASA ratio improved to 41.4%, increasing by almost 8% compared to same period last year.
Robust loan growth along with strong margins (10.5%) led to net interest income (NII) growth of 54% YoY.
Strong other income growth of 48% YoY was underpinned by growth in fees from selling priority sector lending certificates (PSLC).
Low cost to income ratio at 33.7% in Q3 reflects Bandhan's superior operating efficiency.
The bank enjoys reasonably good asset quality though gross non-performing assets inched up 2.4% from 1.3% in the preceding quarter. However, thanks to high provisions, net non-performing assets remained stable at 0.7% as at end December.
Overall, Bandhan bank delivered strong performance across most operating metrics. The bank has addressed the key two issues that could have otherwise remained an overhang. Acquisition of Gruh Finance led to reduction in promoter stake to 61% and full provision of IL&FS exposure should be welcomed by shareholders.
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