Bandhan Bank expects fresh slippages or the fresh addition of bad loans for the fourth quarter to be less than that of for the third quarter this fiscal despite the wave of Omicron as it believes the current surge in Covid-19 cases is unlikely to affect its asset quality. For the lender, which swung back to profit in the third quarter after registering a whopping loss in the second quarter, fresh slippages net of recovery from stressed accounts stood at Rs 1,893 crore in the October-December period of 2021.”I have not seen any impact of the Omicron wave on our bank’s asset quality.

Collection efficiency for January has been similar to that of December last year. Recovery time with an Omicron-related infection is generally fast. So, at the ground level, our customers’ businesses are doing good despite the third wave of the pandemic,” managing director and CEO Chandra Shekhar Ghosh told FE. The bank’s collection efficiency for the EEB segment (erstwhile micro banking segment) for December stood at 92% (including NPAs) against 86% in September 2021. It was 97% (excluding NPAs) for December versus 93% in September 2021.

In Assam, collection efficiency for December rose to 96% from 82% in September. According to Ghosh, it would take “a couple of quarters” for the bank to get back to pre-pandemic levels on all fronts. For restructured customers, a moratorium on loan repayments is up to June. However, around 2/3rd of the restructured customers continued to pay voluntarily. The share of full paying customers stood at 89% in December, up from 79% in September 2021.

Around 66% of NPA customers continued to make payments in a bid to regularize their overdue loan accounts at the earliest. Bandhan Bank has not seen any impact of the third wave of the pandemic on demands for loans this quarter. “For the bank, business in the last quarter has always been higher compared to the other quarters. I don’t see that this quarter (Q4FY22) will be different,” the MD added.

The loan portfolio grew 9.6% year-on-year to Rs 87,998 crore in the third quarter. The lender on Friday reported a 35.79% year-on-year jump in its net profit to Rs 858.97 crore for the third quarter from Rs 632.59 crore for the same period last fiscal as the lender’s non-interest income grew and provisions fell. It had posted a whopping net loss of Rs 3,008.59 crore for the second quarter this fiscal on the back of Rs 5613.48 crore provisions as it had seen a huge surge in bad loans. Non-performing assets (NPAs), in absolute terms, rose 7.74% quarter-on-quarter at Rs 9,441.57 crore in Q3FY22 as against Rs 8,773.60 crore for Q2FY22.

On a year-on-year basis, its NPAs soared ten-fold from Rs 859.22 crore in Q3FY21. During the third quarter of this fiscal, the bank’s gross NPAs as a percentage of total loans stood at 10.81% compared to 10.82% in the second quarter.”As compared to the previous quarter where we saw a negative surprise with the bank building higher provisions, this quarter was marked with mostly positive ones. We are still surprised by the rationale to build higher provisions in the previous quarter especially when there were signs of recovery on the ground as we see the results this quarter.

We have now seen a recovery in disbursements leading to steady growth in loan books and a decline in stress levels (SMA 1-2 and restructured loans). NPL ratios are flat q-o-q suggesting a possible peak in this ratio. Return ratios still have scope for improvement which we should see in the next few quarters,” Kotak Institutional Equities said in its report on Bandhan Bank on Saturday.