Bandhan Bank Q3 Results Review - Higher Slippages Continue To Impact Profitability: Nirmal Bang
Bandhan Bank’s profitability was impacted by higher slippages and write-offs from its EEB portfolio.
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Nirmal Bang Report
Bandhan Bank Ltd.’s profitability was impacted by higher slippages and write-offs from its EEB portfolio, which compressed margins and credit growth. Net interest income declined by 2.1% YoY (5.1% QoQ) to Rs 208 billion. Net interest margin declined to 6.5% in Q3 FY23 but it stood at 7% in Dec-22.
Furthermore, with the increase of 250 bps in yields and lower interest reversal, NIM is expected to inch up going forward. Moreover, other income reported a sharp jump at 45% YoY (116.9% QoQ), partially supported by the sale of loans to ARC.
Operating expenses remained elevated while lower net revenue led to an increase in the cost/income ratio to 38.3% versus 31.3% in Q3 FY22. As a result, the operating profit declined by 1.4% YoY to Rs 19.2 billion.
Provisions nearly doubled on YoY basis to Rs 15.4 billion. Bandhan Bank reported profit after tax of Rs 2.9 billion versus Rs 8.5 billion in Q3 FY22.
Gross slippages declined to Rs 32.65 billion versus Rs 39.5 billion in Q2 FY23 with majority of the slippages coming from the identified stressed pool.
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