Also, of the Rs 6,500 crore exposure to Assam (10 per cent of total loan book), Bandhan Bank
has provided for Rs 200 crore on a prudential basis, which is about three per cent of total exposure. While collection efficiency touched 93.6 per cent in December, up from 78 per cent seen during the peak of the protest, news reports don’t suggest complete normalcy returning even now, which could make Bandhan Bank
vulnerable to further asset quality pressure from Assam.
Compiled by BS Research Bureau
Growth in non-microfinance (MFI) business, including Gruh Finance, also seems to be going through tough times, with non-MFI loan assets growing by a crawling pace of 1.5 per cent sequentially to Rs 25,356 crore in Q3. Here too, only the share of loans to micro, small and medium enterprises (MSMEs) to non-MFI loans is up 300 bps sequentially to 23.32 per cent in Q3. While important segments such as retail loans as well as lending to MFIs and other non-banking finance companies
hasn’t changed much. In short, dependence of microfinance (MFI) was static at 61 per cent of overall loan book, indicating that its diversification strategy may take longer time to play out.
The other important point is the compression in net interest margin (NIM or profitability) to 7.9 per cent in Q3 from 8.2 per cent in Q2. While NIM compression was anticipated post the Gruh merger, the decline seems to be happening faster than expected. Asset under management grew at 2 per cent sequentially lagging 11 per cent growth in deposit, thus playing a part in NIM shrinkage.
Analysts at ICICI Securities, who remain positive on Bandhan, have downgraded their earnings expectation by 3-4 per cent for FY20 - FY22. “The recent situation in the north eastern state with substantial exposure and integration of Gruh Finance is seen keeping the growth trajectory moderate,” they add.