Bandhan Bank to Restructure Loan Book, Cut EEB Share to 35%

Bandhan Bank will undergo a strategic business rebalancing over the next two-three years, aiming to reduce its reliance on unsecured microfinance loans under the Emerging Entrepreneurs Business (EEB) segment and shift towards a more secured loan portfolio, a top company official said.

The bank plans to bring down the EEB loan share from 42% to 35% of its total advances, while increasing the share of secured loans, currently at 42%.

The realignment is expected to lower its net interest margin (NIM) by about 50 basis points to 6.1-6.2% from 6.7% recorded in the March quarter.

EEB is a high-margin unsecured loan product.

“The EEB business stress is expected to ease from the second quarter of the current fiscal. We want the EEB share of our loan exposure to be around 35%, while raising the secured lending share,” Managing Director and CEO Partha Pratim Sengupta said.

He said the lender is targeting 15-17% credit growth over the next two-three years, and is innovating its product portfolio to support this shift.

Bandhan Bank on Wednesday reported a more than five-fold increase in its net profit for the quarter ended March 31 at Rs 318 crore, compared to Rs 55 crore in the year-ago period, driven by lower provisions despite a decline in net interest income.

The lender's net revenue in the reporting quarter stood at Rs 3,456 crore, marginally lower than Rs 3,560 crore in the corresponding quarter of the previous year.