New bad debt addition for Q4 will be less despite Omicron wave: Bandhan Bank MD
Collection efficiency for January was similar to December of last year. Recovery time with an Omicron-related infection is usually quick.
Bandhan Bank expects new slippages or bad debt additions for the fourth quarter to be lower than in the third quarter of this fiscal year despite the wave of Omicron, as it believes the current surge in Covid cases -19 probably won’t affect its asset quality. For the lender, which returned to profit in the third quarter after recording a huge loss in the second quarter, further net recovery slippages from stressed accounts amounted to Rs 1,893 crore during the period October-December 2021.” I haven’t seen any impact from the Omicron wave on the quality of our bank’s assets.
Collection efficiency for January was similar to December of last year. Recovery time with an Omicron-related infection is usually quick. So at ground level, our clients’ businesses are doing well despite the third wave of the pandemic,” Managing Director and CEO Chandra Shekhar Ghosh told FE. The bank’s collection efficiency for the EEB segment (former micro banking segment) for December stood at 92% (including NPAs) compared to 86% in September 2021. It was 97% (excluding NPAs) for December compared to 93% in September 2021.
In Assam, collection efficiency for December increased to 96% from 82% in September. According to Ghosh, it would take “a few quarters” for the bank to return to pre-pandemic levels on all fronts. For restructured customers, a moratorium on loan repayments is until June. However, about 2/3 of restructured customers continued to pay voluntarily. The share of paying customers was 89% in December, compared to 79% in September 2021.
About 66% of NPA customers continued to make payments in an effort to get their delinquent credit accounts settled as soon as possible. Bandhan Bank saw no impact from the third wave of the pandemic on loan applications this quarter. “For the bank, activity in the last quarter has always been higher than in other quarters. I don’t see this quarter (Q4FY22) being any different,” the MD added.
The loan portfolio grew by 9.6% year-on-year to reach Rs 87,998 crore in the third quarter. The lender on Friday reported a 35.79% year-on-year increase in net profit to Rs 858.97 crore for the third quarter from Rs 632.59 crore for the same period of the year. prior year, as the lender’s non-interest income increased and provisions decreased. It had recorded a huge net loss of Rs 3,008.59 crore for the second quarter of this financial year on the back of provisions of Rs 5613.48 crore as it had seen a huge increase in bad debts. Non-Performing Assets (NPA), in absolute terms, increased by 7.74% quarter-on-quarter to Rs 9,441.57 crore in Q3FY22 from Rs 8,773.60 crore in Q2FY22.
On a yearly basis, its NPAs increased tenfold from Rs 859.22 crore in Q3FY21. During the third quarter of this financial year, the bank’s gross NPA as a percentage of total loans was 10.81% compared to 10.82% in the second quarter. , this quarter was marked by mostly positive results. We are still surprised by the rationale for the higher provisioning in the prior quarter, particularly when there were signs of recovery on the ground, as we see the results for this quarter.
We have now seen a recovery in disbursements leading to steady growth in loan portfolios and lower stress levels (SMA 1-2 and restructured loans). NPL ratios are flat qoq suggesting a possible peak in this ratio. Yield ratios still have room for improvement which we should see in the coming quarters,” Kotak Institutional Equities said in its Bandhan Bank report on Saturday.
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