Bandhan Bank on Friday reported a 29.9 per cent growth in net profit during the quarter ended September 30, aided by an improvement in net interest income on a year-on-year basis.

Net profit during the quarter was at ₹937.44 crore compared with ₹721.16 crore in the corresponding quarter of the previous year. Sequentially, however, there was a decline in net profit from ₹1,063.46 crore in Q1FY25.

Net interest income during the quarter was at ₹2,950 crore compared with ₹2,440 crore as of Q2FY24, a year-on-year growth of 20.7 per cent, while there was a 1.9 per cent quarter-on-quarter decline from ₹3,010 crore in Q1FY25.

Net interest margin (NIM) during the quarter was at 7.4 per cent compared with 7.2 per cent in Q2FY24 and 7.6 per cent in Q1FY25.

A combination of two factors have led to a contraction in NIM — a change in the asset book mix in favour of more secured loans (housing, retail, commercial banking) against unsecured microfinance loans and rise in slippages (₹200 crore on quarter-on-quarter basis) primarily on account of overheating in the microlending segment.

“While on a year-on-year basis the EEB portfolio (microfinance) has grown 10.6 per cent but quarter-on-quarter wehave decided to hold onto the portfolio given the overheating and overleveraging in the microfinance industry and decided not to grow rapidly at this stage and contain portfolio quality,” Ratan Kumar Kesh, MD and CEO of Bandhan Bank, said.

“If the market condition improves, we should see a turnaround in the overall microfinance industry by the fourth quarter,” he said.

“Between EEB and secured book there is a difference in the gross yield. The change in the asset mix has resulted in reduction in NIM on a quarter-on-quarter basis. With the slippages going up, the credit cost has also increased sequentially,” said Rajeev Mantri, CFO, Bandhan Bank.