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Bandhan Bank Q2 net up 47% to Rs 4.8 bn; net interest income rises 55.6%

Abhijit Lele/Mumbai 11 Oct 18 | 12:37 AM

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Bandhan Bank’s net profit for the second quarter ended September 2018 (Q2FY19) rose 47.4 per cent to Rs 4.88 billion on robust growth in net interest income.

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The Kolkata-based private lender had posted a net profit of Rs 3.31 billion in the July-September 2017 quarter (Q2FY18). The net interest income rose 55.6 per cent to Rs 10.78 billion in Q2FY19 from Rs 6.93 billion in Q2FY18. The bank improved its net interest margin (NIM) to 10.3 per cent in Q2FY19 against 9.3 per cent in Q2FY18.

Chandrasekhar Ghosh, the bank’s managing director and chief executive officer, said healthy NIM reflects about 51 per cent growth in loan book. The control on asset quality also benefitted the bank.

Its loans book rose to Rs 333.7 billion in September 2018 from Rs 221.1 billion in September 2017. Deposits rose by 29.6 per cent to Rs 329.6 billion in September 2018. The share of low-cost deposits (savings account and current account) went up to 36.9 per cent in September 2018 from 28.2 per cent a year ago.

The non-interest income rose marginally by 3.1 per cent to Rs 2.3 billion in Q2FY19 from Rs 2.23 billion in Q2FY18.

Its capital adequacy ratio stood at 32.6 per cent at the end of September 2018.

Referring to the issue of reducing promoter holding in the bank, Ghosh said the bank will submit strategic plan to the Reserve Bank of India (RBI). Bandhan Bank will keep in mind the interest of all stakeholders while chalking out a strategic plan. The bank is working on plans internally and can take some help to firm them up. Ghosh, however, did not spell out a timeline for submitting the plan to the RBI.      

At end of September 2018, the RBI had informed the bank that it was not able to bring down the shareholding of non-operative financial holding company (NOFHC) to 40 per cent from the present 82 per cent that is required under the licensing condition.  As a consequence, the RBI withdrew its general permission granted to Bandhan Bank to open new branches. Now, the bank needs prior approval of the RBI to open branches. Also, the remuneration of the MD & CEO of the bank was frozen at the existing level, till further notice.

Spelling out options before the bank, its chief financial officer Sunil Samdani said since there is the option for offer of sale, the bank is looking for mergers and acquisitions to dilute stake. 

The third choice is to look at fund (capital) raising by issuing fresh shares in the primary market. This will expand capital and the promoter holding will reduce as a per cent of the expanded capital base.

Asked if the present liquidity crisis for NBFCs and its effects will provide opportunity for acquisitions, Ghosh said we will look at such opportunities in the future.

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