Bandhan Bank on Friday reported a net profit of ₹54.62 crore for the quarter ended March 31, 2024, down 93.24 per cent from ₹808.29 crore for the corresponding quarter previous year, as the bank made provisions on legacy microfinance loans.

Net interest income during Q4FY24 stood at ₹2,866 crore compared with ₹2,472 crore in Q4FY23, a year-on-year growth of 16 per cent.

However, provisions charged to profit and loss during the quarter were ₹1,774 crore compared with ₹735 crore in Q4FY23, which in turn pulled down the bottomline of the lender.

The bank’s gross NPA during the quarter was 3.84 per cent compared with 4.87 per cent in Q4FY23. The bank has however seen stability in fresh sllipages at ₹1,020 crore during Q4FY24 compared with ₹1,120 crore in Q4FY23 and ₹1390 crore in Q3FY24.

“The microfinance business has faced severe headwinds during the pandemic and we faced issues with asset quality. We have over the last few years made provisions against the assets.

“We have reviewed our legacy portfolio and as a prudent measure, have done a technical writeoff during the quarter which resulted in lower profits for the quarter,” Chandra Shekhar Ghosh, MD and CEO of Bandhan Bank, told analysts at the earnings call of the bank.

The bank made a technical write-off of ₹3,852 crore during the quarter. Technical write-off refers to cases where the non-performing assets remain outstanding at the borrowers’ loan account level, but are written-off (fully or partially) by the bank only for accounting purposes, without involving any waiver of claims against the borrower, according to the RBI’s framework.

Ghosh however said that despite the write-off, the bank is on a trajectory of improving asset quality.

“The advances portfolio in the last two financial years has shown resilience which is reflected in the improvement in our SMA (special mention accounts) bucket as well. Additionally, with an even stronger focus on recovery, we should see positive traction in our asset quality,” he said.

Ghosh will retire from the bank on July 9. While the search process for the next CEO is on, he expressed confidence in the bank’s current management.

“With the new appointments we now have the full management team onboard and they bring in a wealth of experience and domain knowledge. I have the confidence that they would lead the bank in the next phase of growth which is Bandhan 2.0,” Ghosh said.

He is hopeful of a positive result of an ongoing audit initiated by the National Credit Guarantee Trustee Company on loan claims filed by the bank under a guarantee scheme.

“The audit is in progress and should be completed very shortly. I am confident and hopeful we should get a positive result,” he said.