Bandhan Bank has started the new financial year on a strong note by reporting a net profit of ₹501.67 crore for the first quarter (Q1). This is a 35% jump compared to the ₹371.96 crore profit it made in the same period last year. The main reason for this growth was a big drop in provisions (money set aside for bad loans), which fell by 40.5%.

The bank’s Net Interest Income (NII) [the difference between interest earned on loans and interest paid on deposits] grew by nearly 6% to reach ₹2,920.58 crore. However, the Net Interest Margin (NIM) [a measure of lending profitability] saw a slight drop of 16 basis points to stand at 6.2%. The bank also faced a decline in non-interest income and a rise in operating costs.

Operating expenses went up by 19% during the quarter. The bank management noted that this was due to higher employee costs because of new labor codes. Additionally, global issues like the West Asia crisis made tech products and inventory more expensive. Because of these factors, the operating profit actually fell by over 18% to ₹1,358.10 crore.

On the asset quality front, things are looking better for the lender. The Gross Non-Performing Assets (GNPA) [total bad loans] fell by 26% in absolute terms to ₹4,880.95 crore. In percentage terms, the GNPA ratio improved significantly from 4.96% last year to 3.15% now. Fresh slippages [new loans turning into bad loans] also halved from ₹1,230 crore to ₹630 crore.

Bandhan Bank’s MD and CEO, Partha Pratim Sengupta, mentioned that usually the first quarter is slow for their business. However, this time the bank showed better resilience. While the microfinance segment saw a small decline, the overall gross advances (total loans given) grew by 16% year-on-year. Deposits grew slower at 7%, which is a challenge many Indian banks are facing today.

Mr. Sengupta explained that Indian household saving patterns are changing. Instead of just keeping money in bank deposits, people are now investing in the stock market and bonds. To manage this, the bank is looking at other ways to get funds, such as borrowing and securitization [selling loan pools to other investors to get immediate cash].

Bankers should note that Bandhan is also focusing on new products like FCNR(B) deposits [fixed deposits for NRIs held in foreign currency] to bring in more money. The bank has already collected ₹30 crore through this scheme and expects more soon. For bank aspirants and staff, the focus remains on improving the balance sheet quality and finding new ways to grow deposits in a competitive market.