Bandhan Bank aims to increase secured loan portfolio to 50% by FY26, says CEO

Bandhan Bank is targeting to increase its share of the secured loan portfolio to 50% of the total loan book by FY26, Chandra Shekhar Ghosh, MD and CEO of Bandhan Bank, informed analysts soon after declaring its Q3 results. Last November, the Reserve Bank of India (RBI) warned banks about the increased share of unsecured loans and raised risk weightage.

The bank had earlier said that it aims to raise the share of the secured portfolio to 70% by arch 2025, as reported by ET on October 14, 2022.

On Friday, the bank reported a 152% rise (over the corresponding period) in net profit to Rs 733 crore for the quarter ending December 2023.
Bandhan Bank had a loan portfolio of Rs 1.16 lakh crore, up 18.6% over corresponding quarter last year. Its share of secured portfolio stood at 44.5% for the quarter ending December 2023 as against 44% in the previous quarter, he said

The bank has maintained a net interest margin (NIM) – the difference between the cost of funds and yield on advances- at 7.2%. Responding to an analyst query on whether the bank’s NIM will be impacted if it migrates towards a secured portfolio, bank officials said that as of now, yield and cost of deposits are moving in tantum, and that is why the bank has been maintaining 7.2% NIM.

He said, “As of now, 66% of our retail book is secured, and these are generally high-yield products. We are focusing on affordable housing where yield is significantly higher,” He further said that the bank has projected an NIM of 7% or 7.5%, which will be reviewed in the upcoming strategy meeting. During the quarter under review, the bank sold Rs 720 crore of affordable home loan portfolio to an ARC, Ghosh informed analysts. ET had reported on January 6 that Bandhan Bank sold its Rs 719 crore affordable home loan portfolio for Rs 289.6 crore to Avenue Capital-backed Asset Reconstruction Company of India at a Swiss auction.
Shares of Bandhan Bank closed at Rs 216 on Friday, up 0.96% over previous trading day.

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