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Bandhan Bank Ltd
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Ladies and gentlemen, good day, and welcome to the Bandhan Bank Q1 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ritesh Mehta from Bandhan Bank. Thank you, and over to you, sir. Mr. Ritesh, please go ahead.
Thank you, [indiscernible]. Good evening, everyone, and thanks for joining this call. It's a pleasure to welcome you all to discuss Bandhan Bank's business and financial performance for the quarter ending June '22. We will take this opportunity to update you on the recent development in the industry and Bandhan Bank during the quarter. To discuss all this in detail, we have with us our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh; our CFO, Chief Financial Officer, Mr. Sunil Samdani; our Head of Assets, Mr. Kamal Batra; our Housing Finance Head, Mr. Suresh Iyer.
Now I would like to request our Founder, MD and CEO, Mr. Chandra Shekhar Ghosh, to brief you all about bank's operational and financial performance along with the developments for the quarter ending June '22. Over to you, sir.
Thank you, Ritesh. Good afternoon and [Foreign Language] to all of you, and thank you for your time to joining today. I hope all of you and your loved ones are safe and healthy.
I'm pleased to state that the April to June 2022 quarter has been a balanced quarter for the bank. I will take you through the key figures. Quarter 1 of the financial year is the lean period for the financial services industry, and therefore, the quarter-to-quarter comparison shows a minor dip, which is no different for us. So there, I'm trying to give this the figure compared to the first quarter of the last year to this year first quarter.
The overall advances have shown 20.28% growth year-on-year, and a marginal decline at 2.71% quarter-on-quarter. Why is the decline? Primarily due to the quarter-on-quarter decline because of microcredit book declined at 6.8%, which is the seasonality of the bank.
And second point on that, there is a flood of the Assam. These are the 2 cause, and third cause is coming on that because of the RBI have the new regulation has come and impacted on that the 1st April -- effective from 1st April, so that 1.5 months is a delay. So that is the 3 points have been given this the decline of this the quarter-on-quarter growth of microfinance. But if -- so if we look at loan growth other than microcredit, it will be the 4.3% growth on quarter-on-quarter basis.
A very good point I have been mentioning here. The 27% of the year-on-year growth has come to our housing vertical. This is a very big achievement have been done. And that you've seen that in the last 3 quarters, this the vertical have been growing very good. And it has been [indiscernible] to increase the [indiscernible] loan of the bank. And this is the vertical, 4.5% growth have been given this quarter and -- this quarter-on-quarter basis.
Even in a muted quarter, we have managed to show good growth in the housing finance book. We are planning to grow it more than that growth in this financial year and the future. The retail loan book other than housing finance book consisting of personal loan, gold loan, [ two-wheeler ] loan and auto loan has grown 61% year-on-year and 9.1% quarter-on-quarter. That is also the second focus of the bank to grow in future.
The commercial banking vertical consisting mainly NBFC, [indiscernible] and the SME loan with 81% year-on-year growth, which is the quarter-on-quarter growth has come 3.2%. So this is the -- other than microcredit, this is the 3 verticals have the future growth will come to the bank, which can be diversify the bank portfolio across the all vertical, which we are projected strategically. The growth of this segment is -- will come sign for the bank as this is aligned with the bank's portfolio diversification agenda.
The first quarter of the current financial year saw economic growth revived strongly as many business returned to normalcy, given the significant increase in the confidence among the population of managing COVID. We are happy to see signs of strong demand for credit in the most of the business in the first quarter. Due to the implementation of new regulations, growth in microcredit, little bit this muted.
Coming to this -- the liabilities part. Our deposit has grown 20.33% year-on-year, and CASA also have been growing 21% year-on-year. The CASA ratio has come 43.2%, which is 160 basis points higher than the last quarter. The retail deposit is our focus, which is 78.4% in this quarter, which was in the earlier quarter, 77.3%. So that we [indiscernible] the liabilities growth also has come very good, strong. And given a focus on that will be continue our retail deposit and CASA deposit in future to manage our advanced growth.
Along with the business growth in advance and deposits, we have also seen very encouraging collection efficiency trend during the quarter. The overall collection efficiency of the bank has come 97% in quarter 1. If I come to this, the microcredit, excluding NPA and restructuring, overall, EEB collection efficiency is at 98%, which is a very normal collection efficiency. West Bengal is at 98%, Assam is at 95% and Rest of India, 98%.
If I go to this, including restructuring loan, excluding NPA, overall EEB collection efficiency, 94%; West Bengal 94%, Rest of India 96%, Assam is at 78%, which means from that the flood is a little bit impact has come to the collection efficiency. Microcredit loans that have been disbursed after the second week of COVID till June 2022, 99% of our customers are paying back. Our NPA is at just less than 2% in that portfolio. This shows that the loans given after the COVID second wave are mostly standard and are as per our usual pre-COVID experience. That is have been given the strength of the bank, the future, our growth of this microcredit will be not like to again any of this -- the critical position on that.
With the people's likelihood coming back on track, we have observed and engaged among our customers to standardize their accounts in order to continue to enjoy the benefit of formal credit by maintaining a healthy credit record. We have seen strong collection efficiency despite the flood in Assam.
For the first quarter, our gross NPA ratio stood at 7.25%, which was in the last year first quarter, 8.18%. Net NPA has come 1.92%, which was in the last year first quarter was at 3.29%. We see that the business growth, customer confidence, credit demand. And we have the confidence on that, we'll be like to continue our net NPA less than this amount, which is 1.92%.
We are more than covered in terms of our provisions. Total provisions of the bank as on -- cumulatively as on quarter 1 financial year '23 is INR 8,847 crores compared to INR 8,197 crores in the last quarter. This makes our -- PCR is at 75%, but if it is [indiscernible] 101%. Bank has not taken any restructuring in this quarter. And we have also not feel that it is needed to future. And there is no write-off we have been done this quarter.
During the quarter 1, the bank has seen improvement in the gross [ NIM ] and the net NPA level compared to the quarter 1 of the first year -- last year. But on a sequential basis, we have seen some increase in the NPA figures, mainly due to 3 causes. One is a restructured loan, though the restructured customers, 57% are paying [indiscernible] disbursement and the Assam flood. Bank has seen total fresh slippage, INR 1,125 crores, which was lower than the last quarter, which was the INR 1,365 crores.
[ Within ] our fresh slippage in the EEB segment was INR 908 crores in the quarter 1 versus INR [ 1,181 ] crores in the last quarter. Most of the fresh NPA, which we are seeing in this quarter are the ones to whom we have lent during the COVID period. Many of our customers have been paying regularly and have nearly regularized their overdue account. But until their entire overdue amount is not recorded, they cannot be categorized as a non-NPA customer.
Finally, in the first quarter, we have seen that the 73% of our NPA customers are paying and 57% of our restructured customers are paying, which given that the confidence to us the growth in net NPA will be -- future will be come down, no fresh slippage happened very big way on that.
From the -- it is only the matter of time because customers are paying -- these 2 types of customers, they are paying not in a full all. They are paying the partial installment so that there is a swing on that, some of the buckets [ of their risk ]. But their interaction with us, we've seen that they are giving the confidence to us. They will take some time but repay that full amount on that.
With the business growth and improvement in the collection, we have seen our profit growth has come 138% year-on-year, which is that this quarter has come INR 887 crores against the net profit of the last year in the same quarter, INR 373 crores. Our net interest income has shown a growth of 19% year-on-year. It has increased to the INR 2,514 crores in quarter 1 financial year '23 from INR 2,114 crores in quarter 1 financial year '22. Our net interest margin for this -- for the current quarter is 8%, which is the range of our expectation.
Total credit cost for the quarter, financial year '23 is 2.7% compared to the last year first quarter, 7.2%. I'd like to mention in here, the credit cost and NPA percentage has given the confidence to us that we'll be like to continue in this record in this financial year.
Coming to this outlook for the rest of the year, as you all know, we are seeing the economic activity picking up and business coming back to normal across the country. The bank has a focus on that the business growth in this financial year, which is that the pre-pandemic situation. And credit cost, I already mentioned, [ and NPA ] has stabilized. And diversification is our core area. We are like to continue to do it so that housing, retail other than housing and SME, we also like to continue to grow on that.
All these together, we see that this quarter, we have added 6 lakh new customers. So bank is growing not only that the existing portfolio growing, that is also new customer adding, and then our liabilities and as they both are making growth on that.
I wish you and your family all the very best. Please take care, and stay safe. Thank you for all of you to listen me. And if you have the question, you can.
Thank you, sir. Now we will have an opening remark from our CFO, Mr. Sunil Samdani. Over to you, sir.
Thank you, Ritesh. Good evening, ladies and gentlemen. I will take this opportunity to run you through few slides of our presentation. Starting with Slide #5, which talks about the EEB collection efficiency. Here, we are talking about collection efficiency, excluding the restructured portfolio to make it like-to-like and comparable with the previous quarter.
So as it's visible, for the month and for the quarter, West Bengal and Rest of India, the collection efficiency stands at 98%. And Assam for the quarter is 95%, but for the month of June is 93%. Assam has been impacted by flood in the month of June. And hence, the June collection efficiency is lower. We are seeing an improvement there starting July, and we hope that by September, we will reach the pre-flood level as far as the Assam collection efficiency goes.
If we talk about the share, the paying customers, the customer paying profile, 94% of our customers pay their full installments, 1% are not paying and 5% are paying part installments.
The similar numbers, including restructuring is available. It's on the same logic. So I will not read the same.
I'll go to the Slide #7. Here, we talk about the NPA customers and the restructured customers' payment pattern. How are they behaving? As far as NPA customers grow, 73% of the customers continue to pay either in part or in full, and 27% of the customers don't pay those who are already in the NPA bucket, which is a healthy sign, which means the recovery from NPA will continue to happen, the recoveries and upgrades.
Now coming to the restructured customers paying pattern, about 57% of the customers have paid part installments in the quarter and about 43% of the customers have not paid their installments.
Slide #8, we talk about the DPD movement. Here, you will see the increase in DPD. That's largely because of the restructured customers demand getting generated from April onwards and the impact of Assam floods in the earlier bucket. Other than the restructuring impact, the DPD movement has been less than 0.3 to 0.4 basis points in each of these buckets.
Now coming to Slide #9. Here, we talk about the stress pool and the coverage analysis. What we've seen is the total stress pool with the way we calculate here, which is the restructured NPA, SMA-1 and SMA-2 for the EEB portfolio stands at INR 121 billion. And against that, we have a provision.
Now before we get into the coverage, let me explain this pool of INR 121 billion. You will see the restructured amount at 21.4. That's because half of these restructured customers, the demand has started. And those customers are either in current or SMA buckets or the NPA buckets. Accordingly, the -- what we show here as restructuring is only those customers, which will come out of restructuring in the current quarter. Those who have already come out, their positioning is on the respective SMA buckets or the current buckets.
Now as against this INR 121 billion, we have a provision of INR 76 billion. So the coverage on the provision has improved by 3% quarter-on-quarter. We've taken the extra provision of INR 335 crores this quarter, which is over and above required provision to improve the coverage. So of the total provisioning line item of INR 640 crores that we have for the quarter, INR 335 crores is the additional provision over and above the required provision that we have taken.
The CGFMU recovery stands at INR 25 crores, the first claim we will make in the first week of October, and that claim will be roughly in the range of INR 1,150 crores to INR 1,200 crores. And the estimated recovery we expect going forward to be INR 25 billion. Recovery, as you all know, for us, the second half is more focused on the recoveries. The recoveries in the second half is much higher than the first half. So we are confident of this recovery going forward as well. And of course, the diversification side, which Mr. Ghosh has already spoken about, so I [ did ] not take much of your time.
Thank you very much for your patient hearing. Happy to take questions.
Thank you, sir. We'll now take question and answer. Over to [indiscernible].
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sameer Bhise from JM Financial.
Just a few questions, primarily on the other income bid. Is there any MTM angle to be lower other income during this quarter?
So the other income is lower primarily because of 2 reasons. One is on the treasury portfolio. In the previous year same quarter, I'm comparing it with Q1 of FY '22 because Q4 clearly is not comparable because disbursement in Q4 is almost 4x of Q1. So the processing fee is very high in Q4. So the better comparison is Q1 of FY '22.
So there in Q1, we had booked a profit on sale of investments of INR 174 crores. This is the movement from HTM to AFS that we do once in a year. So that scale has not happened this financial year due to adverse yield curve movement.
And secondly, the mark-to-market provision that we do. In Q1 of FY '22, there was a reversal of mark-to-market provision of INR 86 crores. So effectively, in Q1, there was a INR 270 crore income on the treasury book, whether it is on sale of investments or mark to market. Against that, there is a mark-to-market provision or a [ loss ] that we have done of INR 79 crores this quarter. So that is effectively INR 330 crore movement if we compare last year same quarter to this quarter.
The second piece is on the PSLC income. This quarter, our PSLC income is lower by almost INR 130 crores compared to last year same quarter. That's because we've not sold PSLC this quarter, particularly on the agri portfolio, where we are awaiting clearance from the regulator. At the moment we get that in the second half, probably you will see an uptick in the PSLC portfolio as well. So these are the 2 main reasons.
Okay. Then just talking about PSLC. The annual report also mentions that there is a change in the recognition of priority sector loans. Could you please elaborate? Because the outstanding PSL eligible loans have come down on a Y-o-Y basis. So that would be helpful.
So this pertains to in FY '19/'20, the RBI has an observation that we don't have the land records for our agri portfolio. So clearly, a bulk of our agri portfolio comes from microfinance customers, which are landless labourers. So in such a scenario, there is no question of having the land record.
So accordingly, we had represented to RBI explaining the positions as to why we cannot have the land records here. But since this was an observation in the '19/'20 report for which, there was a demand raised to deposit the funds in RIDF in Q4 of last financial year. So accordingly, we had deposited the RIDF there. In 2021 and 2022, there is no such requirements.
But the assessment is complete for '22?
We are yet to receive the report, final report, but the assessment is complete, and we don't expect that to come in for FY '22.
Okay. And just one final thing. If we look at the DPD movement, in the 61 to 90 bucket, West Bengal shows quite a bit of a jump. Is it primarily the restructured book of that state? Or is there something else to it?
No. It is the restructured book. Excluding restructured book, the movement is less than 20 basis points.
Okay. And just one final thing. Do you think there is a case for revisiting the credit cost expectations that you had put out in the previous quarter around 200, 225 basis points?
So we've kept it at 2.5%, and we continue to keep it at 2.5%.
Next question is from the line of Adarsh Parasrampuria from CLSA.
Sunil, just [ dwelling ] a little in this PSL part. When we go through the annual report, it's the FY '22 PSL loans, which seem to have compliant loans seem to have dropped from 88 to 58 or some percentage. Just wanted to understand, does this have a bearing on how the bank's PSL income would be? Because your stock of PSL-compliant loans as marked for FY '22 is down. So just trying to understand if this can be an issue for our PSLC income.
So there are 2 things here. We have conservatively not considered the agri -- piece of agri tool, which is [indiscernible] agri part as PSL based on the RBI observation of '19 '20. Once we have the clarity on that, then -- and if it is on the positive line, which we expect, then this pool can go up and accordingly, we can look at PSLC income. But at this stage, we will not be able to confirm [indiscernible].
And just to clarify, your FY '21 and '22 PSLC income was how much?
So my FY '22 PSLC income was about INR 650 crores.
Got it. And if it is adverse, like a large part of this goes away? Or how does it work? Or you can still get a material part of this?
About INR 150 crores to INR 200 crores is what we can look at.
If -- okay, your income, so you may lose about INR 400 crores to INR 500 crores, is it?
Yes. That's the worst-case scenario.
Got it, Sunil. And now coming to the DPD movement, right? So the INR 2,100 crores of restructured book, that's something that starts to service the debt in this quarter? Or how is it?
So yes, [indiscernible] started this quarter.
So it seemingly when you look through the numbers, majority of the restructured book is found its way into the DPD buckets. And there is a restructured book, which still is not servicing.
Two questions here. One is that going by the same experience, most of it could be DPD. And then some of these DPD is late stage, so your NPAs will likely rise in 2Q and 3Q, right, as some of this goes along. So I just wanted to understand if we should have ideally provided more, or you seem comfortable because you will get those guarantee-related recoveries that are expected?
If I say one point, then Sunil can be add on that. The beginning on that, our restructured loan is at INR 7,400 crores. And we are now balance has come INR 4,600 crore. So more or less, it's [indiscernible] which is more than around 50% of the loans recovered and customers are paid on that.
And second point on that, those are outstanding our spending. There is a 57% of that the restructured customers are paying. And their payment mix are given as is because of they given the partial amount. So that automatically, they are going [indiscernible] to the different DPD bucket. So we have the confidence on that. They are coming back because they have [indiscernible] credit for running their business. And it has been started the business from the second quarter, which is before the festival. And that is the hope on that, they will be returned back. This is my confidence on my customer.
So specifically to your point, as I mentioned, these are [indiscernible] customers, hence, the DPD bucket. We can see them moving the DPD bucket. But on the provisioning side, I think we are adequately providing. On my entire restructured book, I have an 80% coverage already provided for, right? And I have a position where 53% of the customers are paying. And top it up, we have the guarantee cover, which is over and above this. So on the whole, I think we are adequately -- more than adequately provides it. And hence, we are sticking to our credit cost guidance.
Got it, Sunil. And my last question is on the operational changes done to comply with RBI's norms, right, in terms of how you underwrite. Can you just walk through what all changes was required? Are we fully done and now it's back to disbursements as usual? Or like what were the changes?
Yes, the changes were broadly on the household income identification and recording and calculation of FOIR. So which we used to do as part of our individual lending customers, which was roughly 20%, 25% of our network. Now we have to do it for 100% of our network, which is the household income calculation and the FOIR calculation. So that training for the entire network has happened and that is why the first 30, 40 days of the quarter, that is [indiscernible]. And now we are back to normal, both on disbursement with the new [indiscernible].
[Operator Instructions] And the next question is from the line of Kunal Shah from ICICI Securities.
Yes. So first question on restructured pool. If you can just share the momenta of this restructured pool. So INR 4,900 crores becoming INR 2,100 crores. So this INR 2,700 crores, how much is recovered? How much is flowing into, say, NPA, SMA-2 and SMA-1?
So the question where I'm coming from, just want to sense how much is the incremental stress into this entire pool because of Assam flood and how much is because of restructure?
So let me first give you the numbers. My total restructured pool outstanding, whether it is part of DPD already is still part of restructuring is INR 4,661 crores. Of the INR 4,661 crores, so INR 4,900 cores has become INR 4,661 crores, which means we've collected about INR 300 crores this quarter from the restructured pool.
Of these INR 4,661 crores, we have INR 2,141 crores, which is still in the moratorium, and INR 2,520 crores, we have customers which have moved bucket. So they will be either part of SMA 0, 1 or 2. So on the whole, if you see about 70% of the customers are part of SMA 1, 2 or NPA. But that's because of the part paying nature. Though 54 -- 57% of the customers are paying, we will have these customers move buckets.
Sure. So fair to assume that overall stress pool is going up by INR 200-odd crores and INR 300 crores is something which we have recovered from restructured. So net-net, the increase is only INR 500-odd crores in the stress pool, including Assam impact.
Yes, that's a fair way to look at it.
Okay. So maybe wherever Assam, we have seen delays that would be already pertaining to either the delinquent book or the restructured pool that would have also got impacted to that extent. And again, Assam, there would be a flow-through, which will largely come in Q2 because it would have not -- maybe the DPD bucket would have not got over. So then again, in Q2, we could actually see the real pain coming in from Assam. So would that be a fair assumption?
No. We, in fact, expect things to normalize by the end of Q2 as far as Assam goes. So we are expecting collection efficiency of back to 97% mark where we were by the end of Q4. So it will not be fair to assume that the June month behavior or the July month -- the 1-month behavior because that was a month when we had flood. That behavior will continue throughout.
If you see that, Kunal, the Assam collection efficiency 95% other than restructuring loan in June. So in that sense, if we just say that the flood has been started in the May and up to the June. So that is in 1 side, we see that impact. But the July onward, it will be, again, coming back on that.
Okay. And 1 last question on this DPD SME. So I think last time, you highlighted that we would start the process in this fiscal and we expected recovery in first half. But I think now you said like you will apply in October. So why this delay and maybe we should see some delayed recovery with respect to that of 25-odd or maybe INR 2,500-odd crores, which we are expecting, yes.
No. There is no delay. The process of CGFMU is they process claim only once a year. And they process claim basis the NPA, which has happened 6 months back. So if I claim, let's say, I could have done the claim in Q1 itself. But then I would have got the NPA, which was NPA as on 31st September or December and not as on 31st March. So my eligible amount to claim would have reduced. So put it shortly, if I claim it on 1st of October, right, which is when I can claim the entire NPA of 31st March 2022, I could claim as around INR 1,200 crores, INR 1,150 crores to INR 1,200 crores. But if I have to claim it today, the claim would not have been more than INR 500 crores to INR 550 crores.
So that is why we took that call that we will make this claim in the 1st of October or the first week of October to have the full benefit of INR 1,100 crores to INR 1,200 crores for the year because we can claim only once a year.
Next question is from the line of Saurabh from JPMorgan.
Sir, can you just explain a little bit on Slide 9 that the overall collection is INR 300 crores and you're projecting INR 2,500 crores for the next 2 quarters?
Yes. So we expect that because if you look at the seasonality, the historical trends also, with every quarter, our collection in absolute amount as well as in percentage terms improve, the Q2 is better than Q1, Q3 is better than Q2. And Q4, of course, is the best for us. So as we move to the second half, the collections should improve materially, and that is why we say that we should be able to recover.
Okay. And secondly, on this interest rate hike, a lot of micro finance companies have taken these hikes. And I remember you also took one, but have it started going through your EEB book now?
So as of now, we've not decided on any further hike. We had taken one in September '21. So we will continuously monitor our cost of funds. And if there is a need, we may look at it.
Okay. And just 1 last thing, sir. On your -- so borrowings have gone up sharply this quarter and deposits have gone down. Can you just explain what's happening there?
So see, in this quarter, we have -- so the RIDF requirement, which was there, that was partly done in Q4 and partly in Q1 of this year, in April of this year, right? And hence, for meeting that RIDF requirement, we have taken the borrowing. And borrowing for us is cheaper because it's a refinance and it comes at a cheaper cost than the bulk deposits because there is no CRR, SLR requirements there.
Okay. And sir, your outlook for loan growth this year should be in the 20% ballpark?
Yes.
Next question is from the line of Sameer Bhise from JM Financials.
Just 1 question. Sunil Sir, can you provide the breakup of slippages across business lines?
Yes. Thanks for asking that question because that's the 1 big positive that we've seen in this quarter. The overall slippages for the quarter was INR 1,125 crores. This number was INR 1,365 crores in Q4. So the gross slippages have come down quarter-on-quarter. And more importantly, of this INR 1,125 crores, the slippages from restructured customer is about INR 315 crores. So excluding restructured customers, my slippages quarter-on-quarter has reduced by half from INR 1,365 crores to about INR 750 crores.
Okay. And just finally, of the balanced restructured portfolio, when do you think the entire portfolio comes out of morat?
So by September, everything will be out of morat.
September. Okay.
Next question is from the line of Param Subramanian from Macquarie.
My first question, Sunil, we are budgeting for -- in terms of recoveries from the stress pool of INR 25 billion which was the same as what we were doing before. But if I'm looking at the collections, including the arrears, that seems to have come off pretty sharply. So any outlook? Do you think this number as there is scope for a little reduction over here, your thoughts on that?
No, not really because as I explained, that recovery for us is also seasonal. In a sense, the recovery amount is lowest in the first quarter, it increases as the quarter progresses. So historically, if you see last 20 years, Q4 has the highest recoveries and Q1 is the lowest recovery. So we are confident that this year will be no different. And now that the pandemic is behind us, we don't see a challenge here.
Sure. Okay. And also on the new MFI norms, has it impacted the ticket size of your disbursement? Could you give some color on what your ticket size of disbursement is currently? And has this norm of 50% BMI cap, 50% of household income, has it impacted the ticket size of your disbursements in any way?
Well, I take that point. You know that in the last 2 years we're practicing on that, those are the very seasoned customer and very good business, we've graduated them to this individual as MSME. So larger ticket, bigger ticket size are shifted in there. So in that sense, we have not found out of that because of new role or it has come to our help on that to reduce the ticket size.
So who are eligible for that loan as a graduated loan, their income of the household is more than INR 3 lakhs. So that is we like to more help us on that to not making on that. But after that, if you see that my group loan, which is that called the EEB, other than that the individual loan, their ticket size has come INR 39,819.
Okay. And what would it be, as in this INR 39,800, what was it, if I can get a sense of what it was probably a year or so ago?
It was [ 55 ] [indiscernible].
There will not be a like-to-like comparison because now we have an individual loan or we call it small business and agri loans, which is separate, and group loan is separate.
Okay. The higher ticket customers are migrated to individual, and that's why you're saying the income is more than INR 3 lakhs. Is that the right understanding?
Correct.
Correct.
Okay. Got it. And Sunil, just 1 last data point, if you could just share the restructured portfolio split between West Bengal, Assam and Rest of India, since we have the SME NPA numbers in that split between West Bengal, Assam and Rest of India, if you could share for the restructuring as well, that's my last question.
Just a minute. So my total restructured book, whether they are part of still restructuring or part of SMA, those who have moved down, those whose demand have started is INR 4,661 crores, as I mentioned. Of which, West Bengal is INR 2,123 crores and Assam is INR 1,502 crores.
Assam is?
INR 1,502 crores.
Next question is from the line of Abhishek Murarka from HSBC.
So just 1 clarification I required on this Assam relief scheme. I think the portfolio eligible for this was around INR 35 billion or so last year. What is the update here? Is there any progress or any allocation that would have come to you?
If you see that in the Assam government has given that INR 1,700 crores, as on today, which the customers are regular. And so that it is not any -- all customers that demand we have.
Second point is there is a category 2 and 3, which is overdue and NPA customers. The government in the last budget have been allocated INR 1,500 crores now. And we say that the further need, they will be again given on that. So that INR 1,500 crores, that is an entity time was in this quarter. But because of the flood has come, it has been deferred. And maybe the next quarter, it will become on that.
Okay. So the outstanding portfolio now there is about INR 1,700 crores, is it?
So this claim is as of March '21. So it has nothing to do with current outstanding. The eligibility of the early [indiscernible].
Okay, okay. And just a few data keeping questions. So can you share the movement of NPAs, as in the write-offs and recovery upgrade as well?
Yes. So as I mentioned, the slippages, including slippages from restructured pool, stands at INR 1,125 crores. The recovery and upgrade is INR 538 crores. So the net addition to NPA is INR 588 crores. There is no write-off during the quarter.
Okay. And finally, just state-wise breakup of the restructured MFI. So you gave an overall restructured breakup, just the MFI INR 2,140 crores, if you can give a state-wise breakup?
The INR 2,140 is the restructured portfolio, which will come out of restructuring in Q2. In addition to that, what has already come out in Q1, those customers are part of DPD. So the total restructured pool, the one which is yet in restructuring as of 31st -- 30th June, and the one which has come out of restructuring, as I mentioned, was INR 4,661. And I've already shared the top 2 stage, which is 90% of it.
Okay. So just the EEB, you wouldn't have West Bengal and Assam, how much that split would be?
Yes. So as I mentioned, of the INR 4,661 crores of EEB restructuring book, INR 2,123 is West Bengal.
Next question is from the line of Anand Dama from Emkay Global.
Sir, first of all, in case of Assam, we talked about the SMA pool, but have you done 100% billing in Assam? Or the billing is still in complete?
When you say billing means the demand, so we...
Yes, yes, yes.
The amount of restructuring and the demand have been started to generate from 1st April onwards.
No. But for the standard pool, would you have done basically the entire billing for this quarter or because of the floods and all, you would not have raised demand and because of which that may not reflect even into MSME?
We have not stopped any demand even for a day.
Okay. We have not done that. And what is the situation over there? Basically, the floods have receded, the meetings have again started. Or like, how do you see the no collections panning out over the next 2 to 3 quarters?
So the meeting has started happening. The collections for July is better than June. And we expect, by September, we should be back to normal.
Okay. And when you say normal means that there is still some stress which will flow into the SMA pool, barring what we are seeing at this point of time or this current SMA pool itself will come down?
No. It should come down because as we -- those customers who have already flown, once the repayment starts, the impact of floods goes away, even the stress pool should reduce, because if our collection efficiency improves from 93% to 96%, 97%, the overall outstanding will also reduce.
And sir, is there any scope of -- because of this kind of natural disaster being there that was to the government or basically RBI could allow you to do further restructuring in the Assam specifically?
That is a possibility if they notify this as a natural calamity, then there is an option to bank to avail that.
Okay. And that basically state government has to notify that there is a natural disaster or the central government?
First state government has to recommend and then the [indiscernible] will notify the government.
Okay, sure. And sir, lastly, your staff cost is quarter-on-quarter higher. Is there any one-off over there? Or like is this a new normal that we're going to see?
Quarter-on-quarter is higher because we continue to recommend people in our non-micro segment. We had increased people in our micro segment in previous years that we have to do the door-to-door collection. We are swinging retail and commercial banking [indiscernible] the growth momentum that will be the next growth driver. And also, the impact of the nonpayments.
Next question is from the line of Karthik Chellappa from Buena Vista Fund Management.
Just 2 questions from my side. Firstly, if we look at the various buckets, whether 1 to 30 and specifically 60 to 90 as well as NPL, when are we going to see a far higher increase than the Rest of India? Although in your opening comments, you mentioned that's because of the restructured pool spilling over, are there any specific factors at play in West Bengal which is making the ratio inferior at least to the Rest of India?
Not really because the restructuring was more -- we've already shared the number. So if the restructured portfolio is more in West Bengal and Assam, the flow to DPD will also be higher from that -- on those states. And the reason they are part of DPD bucket is because they are [indiscernible] part installments.
Okay. Got it. The second question is on the housing portfolio. Despite the growth actually starting to revise the NPA, the NPA ratio still seems to be sticky at 3.4%, 3.5%. Why do you think that is the case? And can I also have the restructured number for the mortgage book separately?
Suresh here.
Yes, Suresh. Go ahead, go ahead.
Yes, yes. So on the housing book, actually because the recovery efforts could -- and particularly in terms of the surface have been initiated only post September '21 when the Supreme Court embargo came out that you cannot take any coercive action. So the impact is now getting visible and we should see some improvement going forward. So actually, we have seen some turnaround in the kind of books. But as the restructured pool also keeps coming out and some more new things keep getting added, so overall, there is not much of an improvement which is seen right now, but the impact of the recovery efforts that are being seen, that are being initiated are kind of getting visible, and we should see some improvement going forward. So that's in terms of the portfolio.
Second question as regards your restructured pool, so we have a total restructured pool in the housing portfolio which is about INR 1,171. The entire portfolio has come out of the moratorium period because the last pool actually got over in March. So now the entire pool is out of the moratorium and the EMIs have started commencing. And there again, there has been a little bit of a gap in terms of the collections, which again will be covered in the coming months because after an 18-month gap when you are again going back to the customer, that's a slight difficulty in the coming back into the mode of habit of coming to a payment every month. So that's what is the issue.
So the restructured balance, per se, is 0, but it's either sitting in NPA or in SME 1 or 2 bucket or they have started to pay, is it?
Yes, they have started. So those have started paying. There are also a huge amount of regular customers also. But yes, there are some cases which continue to be in the SMA 1, 2 and a few in the NPA bucket also. But all of them, the EMI has commenced in the last second branch that had also been given, which was for 12 months have also got over and have -- the EMIs have started commencing from April onwards.
So Karthik, let me give you a sense of restructured book of housing. Everything is out of moratorium as of 31st March 2022. And of that, it's less than 4%, which has slipped to NPA of the total restructured pool. 80% is still in SMA 0 or current. And the balanced 10% is in SMA 1 or 2.
So strictly speaking, out of the INR 530 crores, which was the fourth quarter balance in the housing book, only 10% is either SMA 1 or 2? The balance is either into NPA or has been collected, right?
Which number are we looking at? 500?
At the end of the fourth quarter last year, the restructured book under housing, was it like something like INR 5.3 billion?
Right.
And that -- you're saying right now, 10% of that, which is basically 530 million or so, it's still in SMA 1 or 2, whereas the balance either is current? Or have some of it have flipped into NPA, right?
So 5% has slipped into NPA. The rest is current.
Okay. Rest is current. And 10% is basically still in SMA 1 or 2? Okay.
Yes.
Okay. This is very clear. And wish you and the team all the very best for the remaining quarters.
Thank you.
Thank you.
The next question is from the line of Mayank Gulgulia from SBI Life.
Just a follow-up question [indiscernible]. So like we will be making application in the month of October, when we will be receiving the fund from there?
Typically in 2 months' time. So in Q3, we should have it increase.
Okay. And 1 follow-up on the Assam guarantee scheme. So out -- like you shared previously that INR 1,500 crores was supposed to come in this quarter, which might get deferred from next quarter. This is for INR 1,500 crores of Bandhan Bank or for the entire MFI lender?
So what Assam government, what we hear, and this, of course, is from the media reports, right? We -- so there, it says that INR 1,500 crores have already been allocated for the delinquent bucket. So there are 3 categories: 0 DPD, which is over. Second is delinquent. Third is NPA. So this INR 1,500 crore is for the delinquent bucket, which we have culled out from their budget. And that is for the entire delinquent bucket. And this was to start in Q2, but because of floods, we understand that we will do it in Q3 now.
And what would be our share in that INR 1,500 crores?
About 60% should be our share. Very difficult to quantify exactly, but since our market share then was 60%, we should assume 60% here as well.
Next question is from the line of Jai from B&K Securities.
Most of the questions have been answered. I just wanted to get the total restructuring number at bank level, if you can provide that.
So the total restructuring outstanding today as on 30 June is INR 5,800 crores.
Which is broadly unchanged, right? Because last quarter was also INR 5,890 crores something.
No. Unless we are comparing EEB to total because every quarter, we recover 5% of the restructured pool.
Okay. So the last -- because I -- the number that I have for the last quarter was INR 5,890 crores. I mean, if you can share the last quarter if you have that, otherwise...
About INR 6,130 crores.
Sure, sir. The second question is, sir, on provisions. So total specific provisions at bank level, if I see from gross minus net NPA is around INR 5,200 crores. What is the over and above provisions which are not flowing into the PCR at bank level?
The overall provision that we carry is about INR 8,900-odd crores.
Okay. But this -- part of this would be such provisions which are 100% provided, which -- hence -- so I mean -- see, you have given INR 7,600 crores provisions in EEB portfolio.
Right.
This includes specific plus nonspecific everything, right?
Yes. Other than the regular standard effect provision.
Right. And the total provision is INR 8,900 crores at the bank level, specific, nonspecific everything.
Yes.
Sure. And last 2 things, sir, actually, one is, if you have the ECLGS number handy for the bank outstanding or disbursed whichever way? And if you also have the write-off for EEB for FY '22? This quarter, it was 0, and the write-off number for '22?
So in '22, we did INR 3,220-odd crores -- INR 3,225-odd crores.
So for EEB, right?
Yes, INR 3,243 crores.
Sure. Yes. So any...
And what was your next question?
Sorry, sir, ECLGS number outstanding.
I don't have it handy. I'll check and come back.
Sure. And just to double check, sir, the total provision is [ 8,900 ], of which [ 52 billion ] is specific at a bank level. So around INR 3,700 crores is nonspecific provisions. Is this right?
You can say that, but I will have to check how -- whether we've allocated it to particular because we normally have allocated some provisions to restructured customers as well.
Right. And what -- so if you -- sorry, what is the provisions against, let's say, INR 5,800 crores. You -- I think you mentioned some PCR on RSA also.
Yes. So my restructured book of INR 4,661 crores, which is the EEB, which is 90% of the restructured book. Against that, I have a 75% coverage.
Sure. I think that ties up then. Okay. Great. And last thing, sir, on OpEx. So there is a clear acceleration in the OpEx growth at a time when, of course, the revenue has been slowing down. So how should one look at the OpEx growth in the -- for the full year, let's say?
No, we are looking at a full year growth of 20%. So clearly, we don't see a scenario where the revenue is slowing down and the OpEx will go up. There is always a timing difference. Once you introduce the increments, the immediately next quarter gets impacted. And for us, the growth comes in the second half. Our OpEx to assets continues to be in that range of 2.8%. That has not gone.
And it should not go down -- go up also, right? This is what should [indiscernible]?
Yes, it will not. Directionally, it will come down as my portfolio gets built, which typically happens in the second half.
Next question is from the line of Manish Shukla from Axis Capital.
Just taking for the OpEx question forward. As the business mix evolves towards your target over the next 3 years, how do you see the OpEx to asset trending?
We -- if you talk about 3 years, we see OpEx to assets at 2.5, 2.6.
Okay. All right. The second question is on net interest margin. Now you have the dynamic of changing business mix as well as rising cost of funds environment. So how should we think of a steady state or normalized margin for you?
See, net interest margin depends on the interest rate environment going forward, right? It depends on how the interest rate moves, how much the deposit cost moves and how much we are able to pass on it to the customer. But broadly, we are looking at in this range of 8%, plus or minus 20 basis points.
Okay. So despite the rising rate environment and change in asset mix, you think you can hold on to the current level of margins? As the mix changes you don't see margins trending downwards.
If we talk about FY '23, yes. Longer term, clearly, the trajectory will be lower, but FY '23, yes.
The next question is from the line of Praful Kumar from Dymon Asia.
Sir, a couple of basic questions. One, Bandhan is known for extremely loyal customer base. Over the last couple of years, there was a lot of turmoil. What has been the customer attrition at the bank level in terms of customers that we lost over the last 2 years?
Customer loss is normally we have lost in a year-over-year basis, 9% normal time. And out of that, in the 5% are -- we have rejected; 4%, they have rejected because of the heat or they are not like to take the loan further. So this is a normal point of the customer turmoil.
That's a normal classification.
Yes.
But sir, now you have a significant book that were in the morat, there was a significant book that is restructured. And in that period, these customers being not very high on cash flows, would need more funds. So how does it happen then in terms of how they fulfill their needs in terms of money requirement?
So as far as we are concerned, we have given the moratorium restructuring. That's the best we can do. So unless -- and our policy is 1 loan. So unless the loan gets cleared, we don't offer further loans.
Correct. So that's what I was trying to understand, sir. Since it's restructured, it's an NPA, and they will need more cash flow. So generally, there has to be customer attrition, which logically has to be much higher in such scenarios because they will go to somebody else to borrow, and we can't talk it up in terms of our loans because either it's NPA or morat or restructured.
So that's one way to look at. The other way to look at it, which is what we are seeing is the customer takes more time to repay, right? They are under NPA, 73% of them paid, which means they are paying partly solved. Similar is the case for restructuring. So they will take longer time to repay their loan. And once they clear their loans, they will be eligible for new loan. There is a character of [indiscernible].
Once they start part...
Yes, please go ahead.
Yes. So my question is once you start part repayments, can we give them more loans or they have to clear a certain threshold before we disburse them or top up the loans, how it works?
We don't do top up loans, and we have a policy of 1 loan. So unless they clear the loans, we don't allow them fresh loans.
Next question is from the line of Nitin Aggarwal from Motilal Oswal.
Most of my questions have been answered, but just 1 clarification around the credit cost, which you talked about that you're keeping the estimates broadly unchanged for FY '23. So how confident we are on this? Because if I look at, like, our SME numbers have doubled on a sequential basis. So what gives us the confidence to keep the trade cost numbers almost unchanged?
So as I mentioned, my coverage on restructured and gross NPA is more than 75%. And on top of that, I have the CGFMU guarantee. And if there is -- and there is a probability on the Assam release scheme funds is there. And the way to look at is 73% of my NPA customers are paying. 53% of my -- 57% of my restructuring customers are paying. Clear confidence of recovery from these customers as well. So with all of this, I think we are fairly confident that for the full financial year, we should be in that range.
Next question is from the line of Param Subramanian from Macquarie.
Just 1 data query. So the RIDF bonds that you have outstanding, so in the annual report, you're showing as INR 3,300 crores. What is it currently since you said Q1 also, you made incrementally some RIDF investments? And what is the margin impact that we are seeing in this quarter because of that?
So the current outstanding is INR 5,632 crores. And the margin impact on NIMs because of RIDF is about 20 to 25 basis points.
25 to 30 basis points?
20 to 25.
The next question is from the line of [ Rushikesh Vise ] from Money Wealth Company.
Well, thank you for giving me an opportunity for this. But I think most of my questions have been answered.
Thank you. As there are no further questions, on behalf of Bandhan Bank, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.