Bandhan Bank has charted a diversification plan involving a change in the asset mix and expansion of the city-based bank’s presence beyond eastern India over the next five years.

The asset mix of the bank by 2024-25 is estimated to comprise 30 per cent each of emerging entrepreneurship business (including microlending), mortgages and commercial loan (including SME credit), while retail lending will comprise the remaining 10 per cent.

As of September 2020, around 65 per cent of the bank’s asset book is in emerging entrepreneurship, 25 per cent in mortgages and the remaining 10 per cent in commercial and retail loans.

Although the share of high interest earning micro loans will go down in the overall asset mix, the bank has charted an aggressive expansion plan by adding more banking units outside its core geographies to shore up its business and protect margins. The overall share of banking units in the east will go down from around 53 per cent to around 23 per cent with south India being a focus market for the lender.

The bank’s managing director and CEO Chandra Shekhar Ghosh on Monday said plans are afoot to open 574 outlets by March 2021. As of September 30, 2020, total banking outlets were 4701.

“Retail lending will be a big opportunity for the bank. With the newly introduced retail advances vertical, we have also developed new products. We are also expanding our network and adding more banking units outside our core geographies,” said Ghosh.
The bank’s profit in the second quarter fell 5.3 per cent to Rs 920 crore from Rs 971.8 crore a year ago as provisions for Covid ate into the bottomline.

During the quarter, the bank has taken an additional provision of Rs 300 crore on standard advances. With this provision, the total additional provision on the books stand at Rs 2096 crore, or close to 2.8 per cent of the portfolio.

“On the deposits front, we have witnessed the best ever quarter whereas on the disbursement front, we are close to pre-Covid level. Collections have seen a steady improvement month on month and are expected to reach near normal in the next 90 days,” Ghosh said.

“In the second half of the financial year, we expect the advances growth to accelerate much faster than the first half and that is when the excess liquidity will get utilised,” said Sunil Samdani, CFO, Bandhan Bank.