Bandhan Bank pre-tax profit falls 40%

Private sector lender Bandhan Bank has reported 40 per cent drop in pre-tax profit in the first quarter (Q1) of 2020-21 (FY21). This is largely due to additional provisioning made against the material impact of Covid-19 on standard assets.

Pre-tax profit of the bank in Q1FY21 stood at ~735 crore, compared to ~1,231 crore in Q1 of FY20. Net profit was ~550 crore versus ~804 crore — down 32 per cent. The operating profit of the bank was also down 32 per cent to ~550 crore, from ~804 crore a year ago.

The bank made additional provisioning to the tune of ~750 crore due to the pandemic in the June quarter. This was over and above the ~690-crore additional provisioning in the March quarter. It has additional provisioning of ~329 crore in its microfinance portfolio, taking the total to ~1,769 crore. The total provisioning in the June quarter of FY21 was ~849 crore, compared to ~125 crore in Q1FY20.

“Overall bank collections improved to 76 per cent by the end of June, compared to 29 per cent in

April,” said Chandra Shekhar Ghosh, managing director and chief executive officer, Bandhan Bank.

While many banks are queuing up to raise funds to shore up capital base, Bandhan Bank believes it does not need to raise capital for the next three to five years.

“Our capital adequacy is 27 per cent, arguably the highest in the industry. Also, we have already upfronted the Covid impact,” said Sunil Samdani, chief financial officer, Bandhan Bank.