By Ashwin ManikandanMUMBAI: Bandhan Banks December quarter earnings rose 10 per cent driven by loans to small and medium enterprises and individuals, but missed expectations as its only large corporate loan to Infrastructure Leasing and Financial Services (ILFS) turned sour, forcing its chief executive officer to end bets on big companies.Net profit rose to Rs 331crore from Rs 300 crore a year ago, lower than analyst expectations of Rs 527 crore.
The bank made a 100 per cent provision for its Rs 385 crore loans made over two years to ILFS.
Shares rose 3.82 per cent to Rs 471.70.These loans (ILFS) were given in 2016 and some about a year back.
This was only large loan we had given.
It was a AAA company and a secured loan.
Investors used to tell us that all our loans are unsecured and we went for a secured, highly rated loans.
It turned out to be a mistake, said CEO Chandra Shekhar Ghosh.Loans grew 46 per cent to Rs 35,599 crore, from Rs 24,364 crore a year ago.
Gross NPA's increased to 2.4 per cent of loans from 1.7 per cent and provisions jumped to Rs 378 crore from Rs 123 crore.Net interest income (NII) or difference between interest earned from loans and that paid on deposits grew 54 per cent to Rs 1,125 crore from Rs 732 crore a year ago.
CASA ratio of total deposit improved to 41.4 per cent from 33.2 per cent a year ago.Micro loans make 86 per cent of bank's loan book with loans to small enterprises of ticket size less than Rs 10 lakh adding up to Rs 1,420 crore of loan book.
We started as a microfinance company and we will continue to with this portfolio, providing microcredit to people of bottom pyramid of economy.
Our country is huge and we have seen 30-40 per cent growth in microcredit portfolio ever year and we will like to grow this book, Ghosh said.Earlier this week, micro finance institution turned bank, agreed to buy home loan company Gruh Finance in an all stock deal which would help bank reduce promoter holding as dictated by regulator.
Ghosh said bank will hence forth shy away from large ticket corporate loans and continue to lend small ticket loans to enterprises and affordable housing segment.