Provision for IL&FS caps Bandhan Bank growth

Private sector lender Bandhan Bank on Thursday reported a hit in profit growth for the December quarter with a 10 per cent uptick at Rs 331 crore due to the provision for its IL&FS exposure. The microlender-turned-bank set aside a whopping Rs 385 crore in provision for its exposure to the troubled infra financier, which dented its profit. The bank did not disclose what’s its exposure to the crippled infra major, though.

“We used to always take unsecured exposures. This was an experiment on a secured lending to a AAA-borrower which has gone bad,” managing director and chief executive CS Ghosh told.

Bandhan is the second lender in this earnings season to report a hit on the IL&FS exposure.

Bandhan Bank, which took over the HDFC arm Gruh Finance in an all-stock deal earlier this week, has recognised the IL&FS account as a non-performing one, pushing up its gross non-performing assets ratio to 2.4 per cent, he said.

Lending to the troubled asset happened in two tranches in the last two years.

“There is no other infrastructure account which is over Rs 25 crore on its book. Of the overall provision of Rs 474 crore, IL&FS accounts for Rs 385 crore,” he said.

Following the earnings announcement, the Bandhan counter gained almost 4 per cent at Rs 471.70 on the BSE.

Net interest income grew 53.5 per cent to Rs 1,124 crore, while non-interest income grew 48.1 per cent to Rs 234 crore. The core net interest margin expanded to 10.3 per cent on an improvement in the share of low CASA deposits.