Bandhan Bank Ltd Q1 FY24 Earnings Conference Call Insights

Key highlights from Bandhan Bank Ltd (BANDHANBNK) Q1 FY24 Earnings Concall

Management Update:

• [00:11:37] BANDHANBNK said the bank added about 130 branches and 7 lakhs new customers in Q1 FY24.

Q&A Highlights:

• [00:25:09] Mahrukh Adajania from Nuvama asked what is the time frame for resolving ECLGS and NPLs covered by guarantee. Sunil Samdani replied that the claim process for ECLGS is slower than CGFMU because it requires uploading case-by-case details into their portal. However, a bulk upload facility is underway and should speed up the recovery of ECLGS guaranteed loans within 3 to 6 months.

• [00:28:49] Mahrukh Adajania from Nuvama enquired about the expected recovery from ARC sale in the income statement for FY24. Sunil Samdani clarified that in 1Q, the total repayment between ARC and CGFMU is INR270 crores, with 2.3 billion in the ARC pool and 420 million in the CGFMU pool. This is the minimum expected as 1Q is historically the weakest quarter.

• [00:29:55] Nitin Aggarwal of Motilal Oswal queried what was the interest reversal during 1Q and how the bank sees margins going ahead despite the reversals. Sunil Samdani replied that the portfolio is divided into ECLGS and non-ECLGS pools. Interest on the ECLGS pool was reversed when it became 90+ days past due, and no further interest was accrued. The reversal number for the other businesses is not available at the moment.

• [00:31:04] Nitin Aggarwal with Motilal Oswal asked how is CGFMU handling the big claims and if it expects any delays in receiving the money, including the tranche expected in FY25. Sunil Samdani answered that no delay is expected in receiving the money from CGFMU, apart from procedural delay, and it is expected to arrive by August 1H at the latest.

• [00:31:39] Jay Mundra at ICICI enquired about the quantum of total provision including contingent etc.  Sunil Samdani said that the total provision as on June end stands at 57.25 billion, up by 7 billion from 4Q23.

• [00:35:54] Saurabh Kumar of JPMorgan asked how the bank plans to achieve the guided 20% loan growth, especially with the need for higher diversification and the expected sharp pickup in the housing finance business. Sunil Samdani replied that last year’s 10-11% growth was achieved despite an 11% write-off or sale to ARC, resulting in an adjusted growth of close to 20% with an 8% drop in 1Q. This is consistent with the usual growth seen in 1Q.

• [00:38:56] Saurabh Kumar at JPMorgan enquired about the expected credit loss on the 2% that slips into SMA zero with a collection efficiency of 98%. Sunil Samdani answered that collection efficiency has increased from 96% to 98% in the past year and is expected to improve further in the next financial year. Credit cost should be counted based on the total year performance, not just the first quarter.

• [00:43:19] Prakhar Agarwal asked about the core banking transition for portfolios other than housing and its impact on the targeted 20% growth. Ratan Kesh replied that the migration is planned for 2Q and may be done in one or two phases. There may be some disruption for 2-3 weeks, but the benefits outweigh the risks.

• [00:53:56] Abhishek Murarka from HSBC asked how the bank plans to sustain its NIM of 7%+, given the expected decline in CASA ratio and higher deposit growth. Sunil Samdani CFO said the bank believes it can maintain its NIM guidance of 7%-7.5% and reverse the decline in CASA ratio, keeping it within the guided range.