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EquityPandit
BANKING

Bandhan Bank Doubles Q1 Net Profit to Rs 887 Crore on Lower Bad Loans

Bandhan Bank declined 2.12 per cent to Rs 265.20 on BSE.

On Friday, Bandhan Bank said its net profit doubled to Rs 886.5 crore in the June quarter between April-June 2022 and April-June 2023 on lower bad loans.


The Kolkata-based private sector lender posted a net profit of Rs 373.1 crore last year.


Total revenue increased from Rs 2,731 crore to Rs 2,844.1 crore. Bandhan Bank said in a regulatory filing that the bank’s interest income jumped to Rs 2,514.4 crore from Rs 2,114.1 crore.


In terms of asset quality, the situation for lenders has improved as gross non-performing assets (NPA) as a percentage of total advances fell from 8.18% in the same period last year to 7.25% by end-June 2022.
Net NPA also fell to 1.92% from 3.29% in the same quarter a year ago.


As a result, the bank’s bad debt and contingency reserves fell to Rs 642.43 crore in the current quarter from Rs 1,460.86 crore a year ago.


The bank’s provision coverage ratio increased to 74.9% as of June 30, 2022, from 61.8% at the end of June 2021.
As of June 2022, the capital adequacy ratio (CRAR) stood at 19.4%, while the interest margin rose to 8%.

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BANKING

SBI Loans to be Costlier as Bank Hikes Key Lending Rate

Nilesh

State Bank of India (SBI) has announced a 10 basis point (bps) hike in the marginal cost of fund-based lending rate (MCLR) across the tenor. The new rates will come into effect from February 15. MCLR is the lowest rate at which a bank can lend money to its customers.

The Reserve Bank of India (RBI) established MCLR in 2016 to determine lending rates for various loans. It usually follows the same trajectory as the RBI Monetary Policy Committee (MPC).

The increase in SBI’s MCLR comes a few days after the Reserve Bank of India’s MPC announced on February 8 that it would hike the repo rate by 25 basis points to 6.5%.

“The MPC believes that further adjustments to monetary policy actions are necessary to keep inflation expectations stable, break the persistence of core inflation and strengthen medium-term growth prospects. Accordingly, the MPC decided to raise the policy repo rate by 25 basis points to 6.50″ The Monetary Policy Committee will remain vigilant on the changing inflation outlook to ensure that it remains within tolerance and is gradually aligned with the target,” RBI Governor Shatktikanta Das said in a statement.

Despite a cumulative rate hike of 250 basis points, inflation has exceeded the Reserve Bank of India’s tolerance ceiling of 6%. India’s retail inflation rose to 6.52% in January. It was 5.72% in December. Wholesale inflation, however, has fallen to a two-year low of 4.73%.

Many banks, including Bank of Baroda, Bank of India and Punjab National Bank, also hiked their key lending rates after the repo rate hike. SBI is the latest to join the list.

The overnight MCLR rate has been raised by 10 basis points to 7.95%, according to the SBI website. 10 basis points boost the one-month MCLR from 8% to 8.10%.

The three-month MCLR has improved to 8.1% from 8% in January. The six-month MCLR is now 8.4%, compared to 8.3%.

The new rate has been raised to 8.5% for one-year terms from the previous 8.4%.

For two-year terms, MCLR has been raised from 8.5% to 8.6%, while for three-year terms, it has been raised from 8.6% to 8.7%.

BANKING

Bank of Maharashtra Jumps on Higher MCLR Rate by 20-30 bps

Neha Verma

After the bank announced the higher marginal cost of fund-based lending rates (MCLR) by 20-30 basis points, the Bank of Maharashtra soared at 8.12% to Rs 35.30 across different tenors w.e.f today (December 14, 2022).

The overnight MCLR increased to 7.5% from 7.3%, and MCLR for December rose to 7.7% from 7.5%, a 20 basis point.

For three months, the interest rate on MCLR was raised to 7.9% from 7.6%, followed by the six-month MCLR rate increased to 8% from 7.7%, and the one-year MCLR rate was raised to 8.2% from 7.9%, a 30 basis point. Today, the revised rates will be effective.

On a standalone basis, the net profit rose at 102.93% to Rs 535 crore in the second quarter of FY23 compared to Rs 264 crore posted in FY22. Total income hit a high at 7% yearly to Rs 4,317 crore in the second quarter of FY23 over in the second quarter of FY22.

The Government of India held a 90.97% stake in public sector banks at the end of the September quarter.

BANKING

AU Small Finance Bank Hikes Rates on Term Deposits and Savings Accounts

Nilesh

AU Small Finance Bank (SFB), India’s largest Small Finance Bank (SFB), has announced an increase in interest rates on term deposits and savings accounts from 12 December.

According to a press release, the bank has raised the maximum FD rate on retail deposits by 25 basis points to 7.75% for regular customers from the existing 7.5% and 8.25% for senior citizens from 8%. The bank had hiked the FD rate on retail deposits by up to 60 basis points in October 2022.

AU Small Finance Bank has also raised the savings deposit rate to 7.25% per annum for savings accounts with balances between Rs 1 crore and Rs 10 crore.

AU Small Finance Bank Executive Director Uttam Tibrewal commented on the rate hike: “Following the recent series of repo rate hikes announced by RBI, we have increased FD and savings rates to maximise the benefits of our customers.”

BANKING

Kotak Mahindra Bank Raises MCLR by 10 Bps

Nilesh

On Wednesday, Kotak Mahindra Bank raised its marginal cost of fund-based lending rate (MCLR) by ten basis points. So, the lender’s one-year MCLR is 8.55%, according to the information on its website. The short-term MCLR is in the range of 7.8-8.4%, while the two- and three-year MCLRs are 8.85% and 9.05%, respectively.


The bank has boosted MCLR by 90 basis points since June. After the Reserve Bank of India (RBI) raised its repo rate by 50 basis points in September, the bank raised lending rates by 20 basis points each in June and July and another sizable hike of 25 basis points in October. So far, RBI has raised the repo rate by 190 basis points since June.


69% of the bank’s total loan book is linked to floating rates, with 53% linked to the External Benchmark Related Lending Rate (EBLR) and 16% linked to MCLR. The portfolio of loans linked to fixed rates accounted for 31%, of which 22% were loans with maturities of less than one year. In addition, to boost lending rates, banks are also raising deposit rates to support credit growth. Kotak Mahindra Bank has a high CASA ratio of 56% and has locked out savings account deposits into long-term deposits, leading to a 16% YoY growth in retail term deposits in 2QFY23.

BANKING

Bank Credit Beats Deposit Growth at Busy Biz Cycle

Nilesh

In India, the Banks are beholding a high credit growth associated with deposits. The credit growth has closely been turned to double the growth in deposits in the current financial year. This can principally be accredited to a busy business cycle.

As of the September-end quarter, the bank credit growth mounted at 16.5%. Meanwhile, deposits rose by 9.2%, per the RBI data.

“Credit growth has further enhanced to 18% as of October 21, while deposits endure growing at 9.5%. But rather than gauge up deposit growth, banks are falling back on their speculation and cumulative their ratio of credit to deposit. Most banks have elevated their credit-deposit ratio to ended 80%,” said a TOI report.

It is important to note that even after the dominant situation, banks aren’t scrambling for retail deposits. The Indian banks were uncertain about how long credit growth will endure and are taking a guarded method by raising interest rates through limited-period proposals.

The country’s major lender SBI has seen its credit rise by 20% as of September-end compared to opportunities of 12% at the year’s commencement.

SBI Chairman Dinesh Khara said that although bank credit is increasing twice as fast as deposits, SBI has a huge base of deposits.

As per Khara, the busy season was the chief factor leading to this growth. According to the media report, the SBI chairperson assumes overall credit to grow by 14% to 16% in this financial year. He called infrastructure, renewable power, oil marketing companies and services the foremost credit drivers.

Deposits growth has always been a concern for lenders. According to Bank of Baroda MD Sanjiv Chadha, the scenario regarding the deposit rates is yet to stabilise.

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