Prudence has been a hallmark of BAHL’s journey of late, and the sound risk management and effective lending practices continued in 9MCY19. The non performing loans to gross advances ratio is a very manageable 1.4 percent. The coverage ratio also provides adequate cover for the NPLs. BAHL did not adopt aggressive lending policy during 9MCY19, and understandably so, given the overall credit appetite in the market, and the interest rate scenario. The advances during the period grew by a modest 3 percent over December 2018, taking the ADR to 57 percent.

Much of the focus was on building the investment portfolio instead, as the yield sin government securities offered an opportunity for banks. The investment portfolio witnessed a mammoth 50 percent jump over December 2018 – taking the investment base to Rs622.8 billion. Needless to say, the bulk of it would be in short-term securities, as dictated by the interest rates. Return on investments constitutes a major part of the top line.

On the liabilities front, the growth was steady, with the deposits base growing by a healthy 8 percent over December 2018 to Rs862 billion. Details of deposit mix are not known yet, but in such times of thin spread, banks have put greater emphasis on adding low cost, non-remunerative deposits. BAHL too, has been focusing on improving its CASA.

The contribution from noncore income increased significantly, as the cross selling arms of the bank, performed well. The cost to income ratio decreased to 55.8 percent from 62.54 percent, compared to the same period last year. The interest rates seem to have peaked, and may at some point lead to increased private credit demand. The bank seems well poised to alter the asset mix strategy, should the opportunity present itself.