MUMBAI (Reuters) – Indian private bank Bandhan Bank reported a 93% drop in fourth-quarter net profit on Friday as it increased provisions and wrote off bad loans.
The Kolkata-based bank’s net profit for the three months ended March 31 was 546.3 million rupees ($6.56 million), down from 8.08 billion in the same quarter last year.
Bandhan Bank’s provisions and contingent liabilities increased to Rs 17.74 billion from Rs 7.35 billion a year earlier.
The bank wrote off Rs 38.5 billion worth of bad loans during the January-March period. No loan was written off in the previous four quarters.
These were loans granted to small borrowers during the pandemic and backed by a government guarantee.
However, the bank said the loans are currently being reviewed by the National Credit Guarantee Trustee Company, an agency set up by the government. This could lead to a delay in the payment of the state guarantee.
The bank described the write-downs as a “prudent measure”.
The gross non-performing assets ratio – an important indicator of asset quality – improved from 7.02% at the end of the previous three months to 3.84% at the end of March as a result of the write-offs.
Bandhan Bank is set to undergo a leadership change after Managing Director and Chairman Chandra Shekhar Ghosh announced his resignation on July 9 after nearly a decade at the helm.
The lender’s net interest income rose 16 percent year-on-year to Rs 28,660 crore, while net interest margin stood at 7.6 percent.
Loans grew by 14.3% and deposits increased by 25%.
The bank’s shares closed 0.9 percent higher ahead of the release of results on Friday.
(1 US dollar = 83.3322 Indian rupees)
(Reporting by Siddhi Nayak; Editing by Sohini Goswami)
