Bandhan Bank Ltd - Feb 2025 Earnings Call Transcript Analysis

February 4, 2025 · 4 min read

Earnings Call Transcript Analysis Report #

Gross Advances: Rs. 1.32 lakh crore (+14% YoY, +1% QoQ; +15% YoY / +2% QoQ adjusted for Rs. 1,266 Cr write-off).
Total Deposits: Rs. 1.41 lakh crore (+20% YoY, sequential degrowth due to planned reduction in bulk deposits).
CASA Ratio: 32% (CASA deposits +6% YoY).
Retail Deposits (CASA + Retail TD): 69% of total deposits (up from 68% QoQ). Retail TD +26% YoY.
Net Interest Income (NII): Rs. 2,830 crore (+12% YoY, -4% QoQ).
Net Interest Margin (NIM): 6.9% (vs 7.4% in Q2 FY25). 9M FY25 NIM: 7.3%.
Net Total Income: Rs. 3,926 crore (+28% YoY, includes one-offs of Rs. 538 Cr CGFMU payout & Rs. 52 Cr Assam relief).
Operating Expenses: +35% YoY (includes Rs. 166 Cr ESOP accounting one-off); +23% YoY adjusted. 9M Opex/Avg Assets: 3.8% (adjusted).
Provisions: Rs. 1,376 crore (includes Rs. 336 Cr incremental provision for technical write-off & Rs. 30 Cr for non-banking assets).
Profit After Tax (PAT): Rs. 426 crore (vs Rs. 733 crore in Q3 FY24). 9M FY25 PAT: Rs. 2,427 crore (+12% YoY).
Gross NPA: 4.7%. Net NPA: 1.3%.
Provision Coverage Ratio (PCR): 73.5% (excluding write-off), 85.4% (including write-off).
Credit Cost: 4.1% for Q3 (3.1% excluding write-off impact). 2.6% for 9M FY25 (2.2% excluding write-off impact).
Return on Assets (ROA): 1.8% (9M FY25 annualized).
Return on Equity (ROE): 13.8% (9M FY25 annualized).
Capital Adequacy Ratio (CRAR): 16.1% (incl. 9M profit).

Deposit growth (20% YoY) outpaced advances growth (14% YoY). NIM contracted 50 bps QoQ due to mix change and higher slippages. PAT significantly lower YoY due to higher provisions stemming from MFI stress and technical write-offs. Slippages increased substantially QoQ (Rs 1,621 Cr total; EEB slippages Rs 1,196 Cr vs Rs 752 Cr in Q2). Collection efficiency dipped marginally QoQ (Overall 97.6% vs 98.2%; EEB 97.4% vs 98.1%).

NIMs expected to moderate further due to increasing share of secured assets. ROA target remains close to 2%. Near-term credit cost target ~2%, aiming for 1.5%-1.6% by FY27. Secured asset mix target of 55%+ by FY27.

Strong growth in Secured book (+34% YoY, now 49% of total). Retail Assets (+95% YoY), Commercial Banking (+38% YoY), Housing (+19% YoY adj. for IBPC). EEB portfolio declined (-3% YoY, -5% QoQ; flat YoY adj. for write-off). Significant increase in provisions and slippages (mainly EEB).

Appointment of new MD & CEO, Mr. Partha Pratim Sengupta.
Formation of a dedicated Transformation Management Team reporting to CEO-chaired Apex Committee, guided by a senior advisor, to drive innovation, efficiency, digital integration, and strategic change.
Creation of a Digital and Transaction Excellence Unit (DTEU) under the COO to enhance transaction banking, payments, digital journeys, granular deposits, and fee income.
Set up of a Market Intelligence Team using GenAI/LLM for monitoring commercial borrowers and detecting early warning signals.
Establishment of a Credit Administration Department to strengthen oversight of credit processes, post-disbursement monitoring, NPA monitoring, and underwriting standards across all verticals.

Focus on growing secured products: Home Loan, Gold Loan, Auto, Commercial Vehicle & Equipment (CV/CE), secured commercial banking, and MSME loans. Continued geographical diversification away from East/NE (Advances share down from 53% FY22 to 39% Q3FY25).

Implementing stricter guardrails for EEB lending (e.g., using 2+1 lender rule vs industry 3+1, 30-day DPD check vs 60-day). Conscious reduction of bulk deposits. Emphasis on upskilling/reskilling existing staff alongside hiring new talent.

Execution of “Bandhan 2.0 Strategy” focusing on diversification. Investments in technology and digital solutions are ongoing.

Banking sector facing tight liquidity and intense competition for deposits. Microfinance sector facing “headwinds and witnessing elevated risks in the portfolio quality.” CASA growth is soft across the industry. Regulatory focus on MFI lending practices (e.g., Karnataka ordinance mentioned, though impact seen as low for Bandhan).