Private sector lender Bandhan Bank on Wednesday reported a nearly six-fold year-on-year surge in its net profit at ₹317.90 crore for the fourth quarter last fiscal, as provisions during the period fell by nearly 30 per cent year-on-year (y-o-y).

The bank witnessed a whopping increase in the net profit despite a 15.29 per cent y-o-y decline in its operating profit at ₹15,57.34 crore during the fourth quarter of FY25, from ₹1,838.48 crore in the corresponding quarter of FY24. In Q4FY24, it had reported a net profit of ₹54.62 crore.

Provisions for the period under review stood at ₹1,260.15 crore, marking a 28.98 per cent y-o-y decline from ₹1,774.32 crore in Q4FY24, according to a stock exchange filing.

Margin Contraction

Net interest income (NII) fell 3.62 per cent y-o-y at ₹2,755.89 crore, whereas non-interest income saw a marginal decline of 0.18 per cent y-o-y at ₹699.62 crore. Net interest margin (NIM) decreased by 96 basis points y-o-y to 6.7 per cent in the fourth quarter last fiscal.

“The microfinance sector has faced a little bit of stress, and the overall liquidity tightened in the system has impacted both growth and profitability at the industry level. In the ongoing challenges in the microfinance sector, our team has worked well to manage the situation. During the quarter, our loan growth and profitability showed moderate progress versus our guidance. We remained encouraged by the condition resilience across the operational metrics,” Bandhan Bank MD & CEO Partha Pratim Sengupta told the media.

During the quarter, gross advances grew by around 10 per cent year-on-year. However, for the EEB portfolio (group microfinance and small business loans), advances witnessed a de-growth of around 9 per cent y-o-y.

The bank technically wrote off bad loans of around ₹1,136 crore in Q4FY25, in which the EEB (microfinance) group loan was around ₹603 crore. Fresh slippages during the Q4FY25 rose to around ₹1,744 crore from ₹1,017 crore in Q4FY24.

“Currently, our overall year-to-year credit cost is around 2.9 per cent. In the next three years’ time, the bank is aiming to bring it down to around 1.5-1.6 per cent,” Sengupta added.

The collection efficiency for EEB loans was at 97.8 per cent for Q4 FY25, slightly higher than 97.4 per cent in Q3 FY25. Provision Coverage Ratio (including technical write-offs) as of March 31, 2025, was 86.5 per cent compared to 84.5 per cent in the previous year. Excluding technical write-off, PCR stood at 73.7 per cent.

The lender’s gross NPA ratio rose 87 basis points year-on-year to 4.71 per cent, while net NPA ratio increased 17 bps at 1.28 per cent.

Published on April 30, 2025