The financial landscape of Bandhan Bank underwent a significant shift as the bank released its Q4 results for the fiscal year 2023-24. The highlight of the report was a staggering 94% drop in net profit, contrasting with a robust 16% growth in net interest income (NII). Additionally, Bandhan Bank declared a dividend, maintaining investor interest amid turbulent financial metrics.
Bandhan Bank Q4 Results – Key Metrics
Decline in Net Profit
Bandhan Bank reported a net profit of ₹54.6 crore for Q4FY24, a sharp decline from ₹808.3 crore in the same period last year. This substantial drop is attributed to increased provisions and the write-off of bad loans.
Growth in Net Interest Income (NII)
Despite the fall in net profit, the bank’s net interest income (NII) saw a positive uptick, rising by 16% year-on-year to ₹2,866 crore, compared to ₹2,471 crore in Q4FY23. This metric highlights the bank’s ability to generate income from its core lending activities.
Dividend Declaration
The board of Bandhan Bank has recommended a dividend of ₹1.50 per equity share, which translates to a 15% dividend for FY24. This proposal is subject to shareholder approval at the upcoming Annual General Meeting (AGM).
Provisions and Contingencies
One of the critical factors behind the drastic reduction in net profit was the surge in provisions and contingencies. The bank’s provisions skyrocketed to ₹1,774 crore, a significant jump from ₹735 crore in the previous year. Additionally, the bank wrote off bad loans amounting to ₹3,850 crore during Q4, a move described as a “prudent measure.”
Impact of Write-Offs
The write-offs pertained to loans issued to small borrowers during the pandemic, covered by a government guarantee. However, these loans are under examination by the National Credit Guarantee Trustee Company, potentially delaying the payout of the government guarantee.
Asset Quality and Growth Metrics
Despite financial setbacks, Bandhan Bank improved its asset quality. The gross non-performing asset (GNPA) ratio improved to 3.84% as of March-end from 7.02% in the prior quarter. This improvement is primarily due to the significant write-offs.
Loan and Deposit Growth
The bank also reported a 14.3% growth in loans and a 25% increase in deposits, reflecting its continued expansion and customer confidence.
Management Transition
Bandhan Bank is set to experience a leadership change as Managing Director and Chief Executive Chandra Shekhar Ghosh announced his retirement effective July 9. Ghosh’s retirement marks the end of nearly a decade at the helm, during which he played a pivotal role in the bank’s growth and transformation.
Market Response
Ahead of the Q4FY24 results announcement, Bandhan Bank’s shares showed resilience, closing 0.86% higher at ₹181.20 apiece on the BSE. This response indicates a degree of investor confidence despite the challenging financial results.
Conclusion
The Q4FY24 results of Bandhan Bank present a mixed bag of significant profit declines and strong operational metrics. The sharp drop in net profit underscores the challenges faced due to increased provisions and loan write-offs. However, the growth in NII, improved asset quality, and declared dividend highlight the bank’s potential for resilience and recovery. As the bank navigates a management transition, its future strategies will be closely watched by investors and market analysts alike.
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FAQ
Why did Bandhan Bank’s net profit decline in Q4FY24?
Bandhan Bank’s net profit declined by 94% due to increased provisions and the write-off of bad loans during the quarter.
What is the net interest income (NII) of Bandhan Bank for Q4FY24?
The net interest income (NII) for Q4FY24 was ₹2,866 crore, a 16% increase from ₹2,471 crore in Q4FY23.
What dividend did Bandhan Bank declare for FY24?
Bandhan Bank declared a dividend of ₹1.50 per equity share, translating to a 15% dividend for FY24, subject to shareholder approval.
How did the write-offs impact Bandhan Bank’s financials?
The write-offs of ₹3,850 crore, related to loans issued during the pandemic, significantly impacted the bank’s net profit. These loans are covered by a government guarantee, but the payout may be delayed due to ongoing examinations.
What was the GNPA ratio of Bandhan Bank at the end of Q4FY24?
The gross non-performing asset (GNPA) ratio improved to 3.84% as of March-end, down from 7.02% at the end of the previous quarter.
What are the future prospects for Bandhan Bank?
Bandhan Bank’s future prospects include navigating a management transition and implementing strategies to improve financial stability and growth, focusing on asset quality and expanding its loan and deposit base.
