Concall Summary: Bandhan Bank Q4FY20 & Q1FY21

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Bandhan Bank Q4FY20


  • Nippon Life
  • Nippon Mutual Fund
  • JM Financial
  • Motilal Oswal
  • Macquarie
  • Franklin Templeton
  • Jefferies
  • Kotak Securities
  • DSP
  • ICICI Securities
  • IIFL
  • B&K Securities
  • HDFC Securities

Business Overview:

  • NII at Rs 1,680 crore vs Rs 1,258 crore YoY
  • Non-interest income at Rs 500 crore vs Rs 388 YoY
  • PAT at Rs 517 crore vs Rs 651 crore YoY 
  • Total Advances (on book + off book) grew at Rs 71,846 crore vs Rs 44,776 crore YoY
  • Total Deposits increased to Rs 57,802 crore vs Rs 43,232 crore YoY
  • GNPA at 1.48% vs 1.93% QoQ 
  • Net NPAs at 0.58% vs 0.81 QoQ
  • Cost to income ratio has improved to 30.3% from 33.4% on sequential basis
  • The bank has made additional COVID-19 related provision on standard advances amounting to Rs 690 crore

ConCall highlights:

  • Customers are not able to come out of their home due to the lockdown. Feedback from 95-97% customer suggests that when lockdown gets lifted, it will take 4-6 weeks to normalize the business
  • 70% (50% agri/agri allied and 20% food processing) of bank’s customer are into essential good business
  • Bank has made Rs 690 crore of additional provision during this quarter and the bank also carrying Rs 310 crore as standard asset provision in its book, so both put together is Rs 1,000 crore
  • Rural area is not very much impacted. Bandhan Bank’s 81% of distribution is in the area which accounts for only 5% of the COVID cases in the country 
  • Liquidity position of MFI is currently stable but they are preserving cash till the time they start collection and that is reason they are applying for moratorium
  • 78% of banks business in Green Zone, 16% in Orange Zone and 5.5% in Red Zone
  • Around 3% of banks book is 0 dpd and 2.2% is 30 dpd (micro, SME and housing)
  • CD ratio has been increased due to merger with Gruh
  • Bank has started disbursement with very small amount
  • CASA break up: CA is 5.78% and SA is 31.06%; total CASA 36.84%
  •  79% borrowers have an average balance of Rs 3,070 in savings account, which is almost 4 weeks of installment
  • 50% borrowers are unique to Bandhan and Bandhan+1 more loan is 80%
  • Almost 87% (for which standing instruction given) of the April installment has been credited to Bandhan’s account
  • Loan Book mix: Formal sector (salaried) 45% and 35% informal (self-employed)
  • Housing loan: Average ticket size of loan on a incremental basis is around Rs 9-9.5 lacs (cost of property would be Rs 14-15 lacs)
  • Almost 54% of customers are on 4thcycle or above
  • Collection efficiency till March was 98.5% and excluding Assam it was 99%. Collection efficiency in Assam was 93.6%
  • Bandhan had taken a provision of Rs 200 crore for Assam portfolio in Q3FY20
  • 90% of banks borrowers are repeat borrowers
  • Mortgage book breakup: LAP – 9%; Developer book – 4% and balance is housing finance
Also Read on FinMedium:  Concall Summary: Everest Industries Q4FY 20

Bandhan Bank Q1FY21


  • Elara Securities
  • Buena Vista Fund Management
  • ICICI Prudential Asset Management
  • Macquarie
  • ICICI Securities
  • Kotak
  • JP Morgan
  • CLSA
  • Reliance Nippon Life
  • Enam
  • IIFL
  • Motilal Oswal Asset Management
  • Emkay Global

Business Overview:

  • Advances grew 17.68% YoY and 3.46% QoQ
  • Micro credit portfolio comprises 61% of overall portfolio
  • Gross NPA at 1.43% vs 1.48% QoQ; Net NPA at 0.48 vs 0.58% QoQ
  • Deposit has increased 35.3% YoY and 6.18% QoQ to Rs 60,610 crore
  • CASA grew 47.30% YoY; CASA ratio at 37.08% (excluding GRUH deposits 37.83%) vs 34.06% YoY. CA at 4.94% and SA at 32.14%
  • Retail Deposit to total deposit at 77.7%
  • NIM at for the quarter was 8.15% vs 8.13% QoQ 
  • Cost to has improved to 27.94% from 28.89% YoY
  • Capital Adequacy Ratio remain strong at 27.29%
  • Bank is expecting things will be normalized by September this year
  • Employee base has increased to 41,563 from 39,750 in last quarter 
  • Customer base has increased to over 2 crore and borrower base to over 1 crore
  • Micro credit portfolio: 70-75% of the portfolio in West Bengal, Assam, Bihar and Tripura

ConCall highlights:

  • Collection efficiency in June for micro credit was 68% and for overall banks was 76%; as of  now collection efficiency has improved to 73% for micro credit
  • Flood in Assam and Bihar and Amphan Cyclone in West Bengal has affected the overall business 
  • During the quarter the bank has made an additional provision of Rs 750 crore on standard advances; with this provision and additional Standard Assets provision that Bank is carrying in Micro banking portfolio total additional provision in books stands at Rs 1,769 crore. 75% provisions is for micro credit
  • 44.4% of borrowers are involved with agriculture and allied activities; 30.3% borrowers are in food processing or having small retail stores 
  • Close to 30% of borrowers have not paid anything during this moratorium period
  • New customer acquisition in the month of June has surpassed pre-Covid level
  • Collection efficiency is highest in Andhra, Telangana and Bihar, but Andhra and Telangana is very small part of the portfolio. Collection efficiency in Assam has come down to 61% from 66% due to flood. Maharashtra (54% collection efficiency) and Tamil Nadu has the lowest collection efficiency
  • New customer acquisition in micro finance business is around 100,000; 5% of existing customer has received new loan. Average disbursement is below 50,000
  • Bandhan currently disbursing gold loan from more than 500 branches
  • NPA has increased in loan against property (LAP) book
  • PSLC income for the quarter is Rs 119 crore; last year PSLC income was Rs 453 crore
  • New customer acquisition would be lower this year; existing customer will drive the growth
  • Currently bank is charging 18.75% interest rate, which is 1% higher than earlier on incremental lending to existing borrowers
  • Once a customer started paying their installments, 99% of them are regular
  • Bank has 58 lacs micro of credit borrowers which is 51% of total borrowers. 16 lacs micro credit borrowers has Rs 100,000-150,000 loan and 40 lacs borrower has Rs 50,000-100,000 loan. 50% banks borrowers have availed loan from Bandhan only
  • Disbursement in housing finance is close to 77% of pre-Covid level; during June bank has disbursed Rs 240 crore while in February it disbursed around Rs 300 crore 
  • Bank will merge the holding company with itself it RBI allows, which will also reduce the promoter holding
  •  Bihar is one of the best performing state for the bank
Also Read on FinMedium:  Concall Summary: Kotak Mahindra Q4FY20

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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