Bandhan Bank Q4 profit jumps manifold, asset quality improves

Private sector lender Bandhan Bank on Friday reported a whopping 18-fold jump in its net profit to Rs 1,902.34 crore for the fourth quarter of the previous fiscal, compared with Rs 103.03 crore in the year-ago period, because of the rise in both interest and non-interest income and a fall in provisions.

The asset quality improved as non-performing assets (NPAs) fell 9.75% year-on-year to Rs 5,757.76 crore in absolute terms, against Rs 6,380 crore in the same quarter a year ago. On a quarter-on-quarter basis, NPAs declined 39.02% from Rs 9,441.57 crore, according to a stock exchange filing. On a year-on-year basis, the gross NPA ratio decreased 35 basis points to 6.46% from 6.81%.

Provisions (other than tax) for the quarter were trimmed massively to Rs 4.7 crore, as against Rs 1,507.70 crore in March 2021 quarter, the bank said.

Commenting on the Q4 performance, MD and CEO Chandra Shekhar Ghosh said recovery from NPA accounts improved significantly, NIM increased, operating profit soared and credit cost came down to around zero. “Credit cost became zero as no fresh slippages happened and collections improved,” Ghosh told FE, adding there was no NPA provision write-back during the quarter.

Other than NPA accounts, collection efficiency has returned to the pre-Covid level. Around 90% of our NPA customers are paying,” he said. At the end of the March quarter, for the EEB segment (erstwhile microbanking segment), collection efficiency, excluding NPA, stood at 99%, compared with 97% at the end of the December quarter.

The lender’s total advances (on book + off book + TLTRO + PTC) grew 14.1% to Rs 99,338.1 crore as on March 31, 2022, against Rs 87,042.9 crore as on March 31, 2021. Total deposits increased 23.5% to Rs 96,330.6 crore, compared with Rs 77,972.2 crore as on March 31, 2021.

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SBI’s Q4 profit rises 41% as provisions fall, core income grows

State Bank of India (SBI) on Friday reported a 41% year-on-year (y-o-y) rise in its fourth quarter net profit to Rs 9,113.53 crore, as improving asset quality helped the lender cut down on provisions. Growth in core income also supported the bank’s quarterly performance.

Net interest income (NII), or the difference between interest earned and expended, rose 15% y-o-y to Rs 31,198 crore. The net interest margin (NIM) improved marginally to 3.12% from 3.11% in Q3FY22.

The bank’s gross advances grew 11% y-o-y to Rs 28.19 trillion as on March 31, 2022. Retail loans grew 15% y-o-y, while the domestic corporate loan book grew 6.35%. SBI chairman Dinesh Khara said that the bank has started seeing traction in the corporate loan segment from the third quarter onwards. “Going forward, we are seeing much better capacity utilisation in terms of the working capital. The working capital utilisation has improved almost to 56%, which was 50% earlier,” Khara said.

According to Khara, the turn in the interest rate cycle is unlikely to affect demand for credit. “So long as there is demand in the economy, there is bound to be a situation where investments would happen,” he said, adding, “The way things are evolving this year, I think it is going to be a scenario where there will be demand for all infrastructure requirements.”

SBI still has an unutilised portion of around Rs 4.6 trillion as working capital and term loans. In the term loan segment, the unutilised portion stands at 19-20%. Taken together with the unutilised working capital limits and term loans, loan proposals in the pipeline are to the tune of Rs 4.6 trillion, Khara said.

Deposits grew slower than loans at 10% y-o-y to Rs 40.52 trillion as on March 31, with the current account savings account (CASA) ratio falling 85 bps y-o-y to 45.28%.

Provisions fell 34.5% y-o-y to Rs 7,237 crore in the March quarter, while slippages rose to Rs 2,845 crore from Rs 2,334 crore in the December quarter. SBI’s gross non-performing asset (NPA) ratio fell 53 bps sequentially to 3.97% and the net NPA ratio declined 32 bps to 1.02%.

The bank reported an NPA ratio of13.33% in its agri loan book and 6.55% in its small and medium enterprises (SME) book. The management ascribed the high NPA ratio in the agri book to macroeconomic factors, specifically rural distress.

SBI’s shares ended 3.76% lower than their previous close on the BSE at Rs 445.05 on Friday.

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Union Bank net rises 8% on strong NII growth

Public-sector lender Union Bank of India on Friday reported an 8.3% year-on-year rise in its net profit for the March quarter to Rs 1,440 crore on the back of a strong growth in net interest income (NII).

The lender’s NII – the difference between interest earned and interest expended – stood at Rs 6,769 crore, up 25% YoY. The net interest margin (NIM) fell 25 basis points (bps) sequentially to 2.75%. The operating profit rose 11% YoY to Rs 5,520 crore.

Gross advances grew 9.6% to Rs 7.16 trillion at the end of March 2022, with gold loans, which grew over 18%, being a major driver. The lender’s current and savings account (CASA) ratio rose to 36.54% in the quarter under review from 36.33% in the same quarter last year. Its total deposits rose 11.75% to Rs 10.32 trillion.

Provisions fell 2% YoY to Rs 3,618 crore. The bank showed an improvement in terms of asset quality. Gross non-performing assets (NPAs) as a percentage of total advances fell 51 bps on a sequential basis to 11.11% and the net NPA ratio declined 41 bps to 3.68%.

The value of slippages during the March quarter stood at Rs 5,672 crore, higher than Rs 3,411 crore in the quarter ended December. Recoveries improved to Rs 1,896 crore in Q4 from Rs 1,343 crore in Q3.

Shares of Union Bank on Friday closed at Rs 36.2 on the BSE, up 7.42% from the previous close.

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Bandhan Bank Q4 profit jumps manifold, asset quality improves

Private sector lender Bandhan Bank on Friday reported a whopping 18-fold jump in its net profit to Rs 1,902.34 crore for the fourth quarter of the previous fiscal, compared with Rs 103.03 crore in the year-ago period, because of the rise in both interest and non-interest income and a fall in provisions.

The asset quality improved as non-performing assets (NPAs) fell 9.75% year-on-year to Rs 5,757.76 crore in absolute terms, against Rs 6,380 crore in the same quarter a year ago. On a quarter-on-quarter basis, NPAs declined 39.02% from Rs 9,441.57 crore, according to a stock exchange filing. On a year-on-year basis, the gross NPA ratio decreased 35 basis points to 6.46% from 6.81%.

Provisions (other than tax) for the quarter were trimmed massively to Rs 4.7 crore, as against Rs 1,507.70 crore in March 2021 quarter, the bank said.

Commenting on the Q4 performance, MD and CEO Chandra Shekhar Ghosh said recovery from NPA accounts improved significantly, NIM increased, operating profit soared and credit cost came down to around zero. “Credit cost became zero as no fresh slippages happened and collections improved,” Ghosh told FE, adding there was no NPA provision write-back during the quarter.

Other than NPA accounts, collection efficiency has returned to the pre-Covid level. Around 90% of our NPA customers are paying,” he said. At the end of the March quarter, for the EEB segment (erstwhile microbanking segment), collection efficiency, excluding NPA, stood at 99%, compared with 97% at the end of the December quarter.

The lender’s total advances (on book + off book + TLTRO + PTC) grew 14.1% to Rs 99,338.1 crore as on March 31, 2022, against Rs 87,042.9 crore as on March 31, 2021. Total deposits increased 23.5% to Rs 96,330.6 crore, compared with Rs 77,972.2 crore as on March 31, 2021.

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SBI’s Q4 profit rises 41% as provisions fall, core income grows

State Bank of India (SBI) on Friday reported a 41% year-on-year (y-o-y) rise in its fourth quarter net profit to Rs 9,113.53 crore, as improving asset quality helped the lender cut down on provisions. Growth in core income also supported the bank’s quarterly performance.

Net interest income (NII), or the difference between interest earned and expended, rose 15% y-o-y to Rs 31,198 crore. The net interest margin (NIM) improved marginally to 3.12% from 3.11% in Q3FY22.

The bank’s gross advances grew 11% y-o-y to Rs 28.19 trillion as on March 31, 2022. Retail loans grew 15% y-o-y, while the domestic corporate loan book grew 6.35%. SBI chairman Dinesh Khara said that the bank has started seeing traction in the corporate loan segment from the third quarter onwards. “Going forward, we are seeing much better capacity utilisation in terms of the working capital. The working capital utilisation has improved almost to 56%, which was 50% earlier,” Khara said.

According to Khara, the turn in the interest rate cycle is unlikely to affect demand for credit. “So long as there is demand in the economy, there is bound to be a situation where investments would happen,” he said, adding, “The way things are evolving this year, I think it is going to be a scenario where there will be demand for all infrastructure requirements.”

SBI still has an unutilised portion of around Rs 4.6 trillion as working capital and term loans. In the term loan segment, the unutilised portion stands at 19-20%. Taken together with the unutilised working capital limits and term loans, loan proposals in the pipeline are to the tune of Rs 4.6 trillion, Khara said.

Deposits grew slower than loans at 10% y-o-y to Rs 40.52 trillion as on March 31, with the current account savings account (CASA) ratio falling 85 bps y-o-y to 45.28%.

Provisions fell 34.5% y-o-y to Rs 7,237 crore in the March quarter, while slippages rose to Rs 2,845 crore from Rs 2,334 crore in the December quarter. SBI’s gross non-performing asset (NPA) ratio fell 53 bps sequentially to 3.97% and the net NPA ratio declined 32 bps to 1.02%.

The bank reported an NPA ratio of13.33% in its agri loan book and 6.55% in its small and medium enterprises (SME) book. The management ascribed the high NPA ratio in the agri book to macroeconomic factors, specifically rural distress.

SBI’s shares ended 3.76% lower than their previous close on the BSE at Rs 445.05 on Friday.

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