Bandhan Bank Limited (BANDHANBNK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bandhan Bank Limited's Conference Call on recent developments. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vikash Mundhra, Head, Investor Relations. Thank you, and over to you, sir.

Thank you, Michelle. Good morning, everyone, and a warm welcome to all the participants. It's our pleasure to welcome you all in this conference call, which is to discuss about the recent development in the bank, that is, the announcement of retirement by our MD and CEO, Mr. Chandra Shekhar Ghosh. To answer your queries regarding the same, we have with us our Founder, Managing Director and CEO, Mr. Chandra Shekhar Ghosh; Executive Director and Chief Operating Officer, Mr. Ratan Kumar Kesh; Executive Director and Chief Business Officer, Mr. Rajinder Kumar Babbar; Chief Financial Officer, Mr. Rajeev Mantri; and myself, Vikash Mundhra, Head of Investor Relations. Before I hand over the call to Mr. Ghosh, a disclaimer from our end that this conference call is limited to the discussion on the recent development in Bandhan Bank, that is, retirement announcement of Mr. Ghosh. Given we are in silent period, no financials or forward-looking strategies will be discussed. Now I would like to hand over the call to Mr. Ghosh. Over to you, sir.

[Foreign Language], good morning to all of you. Thank you for joining this call at a short notice. I would also like to place on record that today's discussion will be limited to my -- discussion of retirement from Bandhan Bank as the MD and CEO. We'll not talk about the business figures as we are [Technical Difficulty]. So friends and my investors, as you are aware, I have decided to retire from my position as the Managing Director and the CEO when my current term ends on July 9, 2024. My decision to retire was made voluntarily by me with due consideration and with a deep commitment to the continued success of our organization. I'm not bidding farewell to our Bandhan family. I am transitioning to a higher strategic role at the holding company level. In my new role, I will pursue a strategic responsibility, where I can leverage my experience and insights to contribute to the group's overall growth and prosperity. My dedication to our bank's vision, goal and purpose remains strong. I want to thank all the stakeholders and investors for placing their trust in Bandhan Bank and me. When we begun [Technical Difficulty], we set out with a vision to create a financial institution that would not only stand the test of time but also serve as a catalyst for economic growth and the prosperity, especially in the financial inclusion. I am proud to say that we have a team, exceptionally talented individuals within our organization, individuals whose dedication and expertise have been instrumental in driving our growth. The bank has a very strong and capable senior management who are ready to take the bank into the next leap of the growth. I'm fully confident that Bandhan Bank has growth in the secure and in very safe and capable hands. I know many of you have the question about the timing of the announcement, which I would like to respond to. I started this Bandhan 24 years ago and I have been fortunate to oversee the transformation of this institution from the small NGO in Eastern India to the largest MFI and to a universal bank across the country, 35 states and union territories. Over the last [Technical Difficulty], we have built our commercial and retail asset business and added further products and the capability. Truly, the bank has a diversified portfolio across the geography. As you are [Technical Difficulty] the recent past, we have enhanced the bank's leadership with our 2 Executive Directors, Ratan Kumar Kesh and Rajinder Kumar Babbar. And one of the CFO joined, which is Rajeev Kumar Mantri, Head of the Markets and Retail Assets; Mr. Santosh Nair, who are working closely with other senior leaders in the bank. This team is ready to take the bank to the next level. In addition to the team being in place, I am also seeing that business momentum has [Technical Difficulty] with the good assets and liabilities growth and improvement in the portfolio quality. You would have seen our initial disclosure number as of 31st March '24 in this regard. I felt that this is, therefore, an appropriate time for me to take these opportunities -- this call, as we [Technical Difficulty] the full business cycle, April to March. It also gives the Board and the selection committee to identify and appoint my successor under the succession plan that the bank has in place. I want to, once again, assure all of you that the bank is ready to take the next leap of growth with the leaders. I assured the Board that I will be available for any guidance or advice. On behalf of the Board, I can also assure you that we'll ensure a smooth transition. It has been an honor and a privilege to serve as the MD and CEO of a great institution, and I look forward to the exciting opportunities. And I feel that it will be like for our bank and the group as a whole. Thank you.

Thank you, sir. Michelle, [indiscernible] we will take Q&A now.

[Operator Instructions] We have a question from the line of Sameer Bhise from JM Financial.

Just wanted to get a sense whether you, Mr. Ghosh, will continue as a Nonexecutive Director on the Board of the bank. And secondly, has there any communication been with respect to RBI, especially after the Board had sent its recommendation around 3 months back? So clarity on these 2 will be helpful.

Thank you. The first [Technical Difficulty].

Whether you will be moving into the Board.

Okay. So first a point on that. I have been -- if you see that the last 24 years, I developed this institution from the scratch to the -- this position. And that is the reason totally operational. So I need now to take some strategic role from the holding company level, not in a Board level on that. So that is my plan on that. So second point on that the...

Any communication from RBI? Okay. No communication.

Okay. No communication from RBI. I can [indiscernible] this question [indiscernible].

No communication from RBI?

I have not received any communication from RBI.

[Operator Instructions] The next question is from the line of Suresh Ganapathy from Macquarie.

Yes, okay. This was my first question, is the resignation with immediate effect or you will continue till July 9? Or what exactly is the status there?

Mr. Ganapathy, I have been -- like to repeat on that my point. This is my retirement, not resignation. It is on 9th July 2024 will be like to complete. So before that, I have been just to disclosure given to the Board and market to all of you that I will not continue after the 9th of July '24 as a MD, CEO. So that is my disclosure.

Sure. Sorry for this. And then apologies on my behalf. The second question is on, sir, just to understand the timing here because, I mean, I know these are very difficult decisions to take. But when the Board recommended your name 3 months ago, I mean, now the problem of the Board now faces is your own desire to retire. Right now, they will have to find and scout for one external candidate. All this process takes time. RBI does its own 2, 3 months of due diligence. Had you taken a decision a bit more earlier and the Board could have been clearer. Now I just want to know how exactly this entire transition period will play out because I'm very sure perhaps by July 9, we may not really find a replacement for you, sir, because RBI takes its own time for due diligence. There could be an external candidate also which the Board might have to give. How will this play out? And why was the decision not taken earlier before the Board sent your candidate -- your name to the Reserve Bank of India as a candidate for the next tenure?

No. Thank you. First, I'd like to give the 2 points from your discussion or some other also maybe like to know. Why this is the timing on that? My timing point on that. I again repeat the point. 24 years, I have been operationally around this institution from the scratch to in this position. And out of that the last 10 years, it is a very much coincide on that or whatever the decision has been taken. 10 years before, April 2, 2014, I received the in-principle license from the Reserve Bank of India. I thank to the RBI on that. And 15 months, I have been spent the time operationally, everything prepare to start the bank. After that, you know that the first 3 years, I have been running the bank, build up this, the deposit model is the best way to confidence gain to the bank. And the listing also done, though we faced the demonetization. And second, for 2 years, I have a need to dilution of my stake of the promoter. And that time, we have also taken a merger of the group, which is that the '19, '20, this 2 years. And next 2 years, '21, '22 it's my worst in my life, which is the pandemic, Amphan, Assam, all [Technical Difficulty]. And I would not get the time to thinking anything on that. After that, '22, '23, I see that very good improvement has come but not in a full improvement has come to the bank. And then I had not yet decided on that time. And when I come to this, the '23, '24, and I think that the business momentum has come very good. And also, I saw that [indiscernible] point of view, other things is there, in a very good way happened on that. And October, if you recall, we have been done in a biggest transformation of IT, which is the CBS. And I need to stabilize it. And if you see that the, during that period, the November, my Board after that have to my renew and submitted to RBI, I cannot say anything because at that time, it's very crucial for my IT transformation is the CBS in October and November, December was very important for the bank. And of course, finally, I feel that the April to March total year, will be like to complete, they're going to like to do this. If you see that in the April on that, the 4th, we have submitted the initial update and 5th, I have would like to withdraw. So this is a total momentum. It's a plan which I see that. This is needed on that whatever has come to this business position and everything on that. And by extent, if you see, all of my senior management have been joined in a -- within this quarter. So I feel that I have the confidence on that. My -- one of the executive director has been joined one year before. And I have been also many things as per my plan is executing, I have been also involved in everything on that, of the institution. And after the join of the another executive director in March and also the CFO in the March and that also helped me to making a very confident decision. Now totally I feel that they are in a good capacity to maintain all that. For that reason, this is the time I have been setting up on that. And you also know that every bank, Bandhan Bank also have the business continuity plan and we are like to, in that way, we are planning in case within 3 months of my time, if not everything happens, in the interim period, one will be like to take the charge until that final one will be not happen. But we are trying the best way how quick it can be like to complete on that. Thank you.

[Operator Instructions] The next question is from the line of Mahrukh Adajania from Nuvama.

Sir, so I guess you partly answered that question in the previous question. Basically, how long do you think will the process of finalizing a list of candidates from your side take, from the bank side take, right? Because we are possibly running out of time now. You will have to -- you'll need a new CEO in place by July. RBI takes its own time. So how soon will the bank be ready with a list, according to you?

I, whatever I saw in the earlier, we are selected the 2 Executive Directors. On that experience we need a minimum 3 months' time to selection on that and then it will be like to go to RBI. Whatever the time taken by RBI, that is how quick they are giving it. That is the only the time.

Okay. So there will be an interim CEO most likely till the whole thing gets finalized?

After the 9th of July, what I see that the July first week, we'll be like to decide what is the position of that. And accordingly, the Board can be decide on that too.

[Operator Instructions] The next question is from the line of Rahul Jain from Goldman Sachs.

Thanks for sharing your candidate perspective. Just again to repeat and understand the next steps the bank and the Board would take. So as I understood from your last response, post 9th of July, there will be an interim MD and CEO till you appoint the new MD and CEO, which could take a couple of more months. Is that the right way of thinking in terms of the next steps the bank and the Board could take?

This is actually the process to happen in that -- the banking industry.

Okay. The second is, sir, in terms of your business strategy. So I want to bucket into 2. One is the balance sheet strength. Of course, the bank has come a long way from post-COVID. How much more work is spending in terms of the cleanup, in terms of recovery, there is an outstanding CGFMU issue also that's facing the bank. And second bucket is in terms of growth and profitability, and of course, the retail evolution. How should we think about the strategy henceforth in your last 3-month period at the bank and even following that?

No. If you see that, Rahul, you know that the, it is in silent period. I cannot be like to talk but on the...

Not in terms of the number, sir. But just in terms of...

I will say that. You can give the chance to -- I can complete. Absolutely that's the, as a MD, CEO, not only that. I'm a entrepreneur. I build the business, the enterprise a long time and learned lot of things. And I have been planned with my senior team, without declaration, there is a good strategic plan, which is possible to execute. And our team have been discussed in the couple of calls with you on that in the last March, along with myself. I hope that's a very realistic strategic plan have been prepared. And when this -- the results will be out and my team along with myself, I also will be attend on that, I'd like to clarify how we are strategically reach on that, the figure and number, way on that. But I have a very good confidence in my team and my strategic plan to success of this goal.

[Operator Instructions] The next question is from the line of Nitin Aggarwal from Motilal Oswal. Mr. Nitin Aggarwal?

Hello, am I audible?

Yes.

Yes, sir, please proceed.

Sorry. So sir, like you've been one of the most senior when it comes to MFI and inclusive banking. If you were to look back over the past few years, what are 1 or 2 things that you think the bank would have done better?

No, if you see that I've been very passionate with the microfinance, no doubt on that. And it will be continue because it is -- has given the chance to me to bond on this level because of the people who are the bottom of the pyramid, they have the need in the financial services. And we have built up a very strong franchise on that. And the pandemic has given a lot of opportunities to us to correct the model. And a lot of new things we are introduced, and it has been proved. And accordingly, it is driving in a very positive way in the future. And simultaneously last couple of years, we are build up our senior level of the team to understand the microfinance. If you see that the total of my heads of this team, there are monthly visited to the micro credit branch and a group meeting to understand about it better. And I have then successfully feel that they are good enough, the knowledge and experience build up on microfinance. Second is there, nearly 1 year before, we have been recruited one the heads, Vishal Wadhwa, who is taking the charge of total EEB. And he is also seasoned banker. And he has been already taken the charge on that and I have a very good confidence on him and his team to continue the same way, whatever the strategy of the bank, to make this -- the growth and others in a perspective on that.

Right, sir. And the other question, why is this [indiscernible] has no prior decision to RBI when you have decided this step? But has there been any exchange of words or thoughts with RBI after you announced the retirement?

It is totally voluntarily. No, so I informed to the appropriate level of my Board and accordingly, it will be like to process on that.

The next question is from the line of [ Dipanjan Das ] from PTC Financial Services. As the current participant is not answering, we'll move on to the next question, which is from the line of Param Subramanian from Nomura.

So my question, again, extends on the previous participant's question. Sir, again, on the timing of this resignation and the need for it, so of course, what we understand is you've been, for example, meeting investors really very recently. So what drove that -- especially the timing of this resignation because as some of the previous participants highlighted, we might have to see an interim CEO because of the short time lines involved. So if you could explain the timing of the resignation because we've seen a lot of churn at the top management level. Some continuity at the top would have helped, especially from you, sir. So a bit on that.

There is a 2 parts, interesting. My wife also asked the same question. We are living together. You have not said to me. But how suddenly you are going to the office and I mentioned about it and many call I receive and I'm not able to given rightly to the people. So basically, business cannot be like to share. It is a very personal decision. Voluntary decision and accordingly I planned and nurtured in the more than 1 year and accordingly has prepared. And even I have then met couple of you in that in the Singapore and the Mumbai, I cannot express on that. So this is my plan, and this is the legal path, too. Again, we like to -- on the time basis, it can be based on that. So this is my first point. And second point in there, you could see that Bandhan and myself, I cannot segregate. It's my daughter or it's my son, I'm not like to explain it that way. I would like to continue my support to the group in the level of holdco, where all are in this particular path in there [indiscernible].

[Operator Instructions] We'll take the next question from the line of Jai Mundhra from ICICI Securities.

Most of the questions have been answered already. Just a small clarification, sir. So when you mentioned that you will assume a larger strategic role at Bandhan Group level, this means the holdco, as you mentioned in the last comment. But is there any -- is this a advisory role? Is this a Board level role? Or is this some trustee kind of role, if you can elaborate there?

So even now, I am the MD and CEO of the bank. So I cannot go to the details of this as of now. After 9th of July, I'll be like to clarify.

The next question is from the line of [ Ketan Saraf ] from SBI Capital Market.

So I wanted to ask you, sir, in the last conference call with regards to the quarterly results, you had mentioned that bank is doing strategic steps to reduce the provisions, which are like on a run rate basis, it is going around INR 300 crores per month. So just wanted to get some clarity how is bank proceeding on, like how are things going in that direction in terms of the stress level. And the second question was regarding the -- like, 3 months back, the Board had asked the RBI for your extension. And in -- like I know that this is repeated question but then what has happened like after you were decided on to for the position? Then in the 3 months, what happened that you have decided this big step to be taken out from the Board level?

[Technical Difficulty] replied already. I replied. First question, I am in silent period. I cannot be mentioned any of this -- the figure on that. I hope that the result -- the financial year, fourth quarter results time, I'll be give them, for the first question, you can repeat on that. And second question, I replied on that many times. That point, I say that, again, I've been specifically said. If you see that the [indiscernible] submitted this paper in November, and October is my CBS transformation. I had to continue on that, the 3 months of time, to 3 to 6 months of time to stabilize it, then was the time to finalize my decision because my first point on that you see, this is my baby. First I plan as to how without disrupting this baby, I can -- will have to take my personal decision. So that is the way I have been thought accordingly.

The next question is from the line of Suraj Das from Sundaram Mutual Funds.

Congratulations on your journey so far and all the best wishes for your future endeavors. Sir, one question only. Again, I mean, I just want to understand your thought process behind it. I think every bank has their own DNA in terms of their success story and Bandhan has been one of the best success story in terms of being from a MFI institute to the universal bank and probably one of the largest private sector banks. So was -- I mean, before your decision, was there a thought that probably you could have stayed for 1 more year or 2 more years? And then probably, you could have passed that DNA to current set of senior leaders who have just joined and probably then they could have been -- have a clear sort of transition to the next level because at this point of time, there could be internal, external and then both candidates could be considered for the next MD/CEO. And hence probably in this transition, is there a possibility that the success DNA of Bandhan could be reduced or something like that? So was there a thought that probably you could have -- while you have completed the IT transformation for the last 6 months, and hence, probably you have a clear thought that now you want to retire. But if you could have waited for 1 or 2 more years, and you could have passed the DNA to the next set of leader. Was there a thought before your decision?

Very debatable on that when it will be after 1 year or 2 years or 3 years or 5 years or maybe the 3 years before. Lots of debate on that. I debated in myself internal. And accordingly, I feel that this is the right time, I can be like to do it and contribute to the strategic level. Because at the strategic level, if you go to my -- our holding company, there is a lot of other vertical already discussed, very recently. So I think that I have need some time to be here to contribute to all.

Okay. Okay. Understood, sir. And one last question, sir. In terms of your potential candidate -- next successor planning, there will be both internal and external consideration, right? It cannot be only internal.

I feel that is the -- I will be like to give to the Board, there are independently like to access. And the best way we can be like to select, which can be very fit for this type of bank for future growth and the strategy, et cetera.

[Operator Instructions] The next question is from the line of Anil Bang from Marshall Wace.

Sir, your call has been very clear till now that this is your own decision. However, given that big audit has been going on, there may be some linkages, which may be drawn between the 2 just because of timing aspect. I just wanted to reconfirm that there is no linkage between the 2. Anything else which you would like to add in this topic?

So, Ratan Kesh here. See, the audit is still going on. And it is going to take another 1 month or so to get concluded. We haven't heard anything from the auditor or from NCGTC on this -- within this regard but it has absolutely no linkage with the audit.

Ladies and gentlemen, this will be the last question for today, which is from the line of Anurag Mantry from Oxbow.

Just one question from my side for my understanding. Can you help me understand what basically will be your and your family's sort of overall leading stake in the bank, directly and indirectly? That will be very helpful.

Your and family's stake in the bank.

If you see that there is a very different structure of the bank. As a MD, I have the stake in the bank in this whole time, the -- because of I was the founder, I have some initial bonds that needed to give to the bank to start it on that. That is only half. But the holding company level, we have the family level, the less than 2%.

As that was the last question for today, I would now like to hand the conference over to the management for closing comments. Over to you, sir.

Thank you to all of you. And I keep the trust and belief on us and our organization, not only bank and the total group and we'll be in touch with all of you on that even after my retirement also. So thank you for your time and keep touch with us. Thank you again.

Thank you, members of the management. Ladies and gentlemen, on behalf of Bandhan Bank Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.