Bandhan Bank Q2 Loans And Advances Up Over 12% YoY; What Investors Should Know

Bandhan Bank Shares: Private lender Bandhan Bank on Wednesday in a business update said its total deposits grew 12.8 per cent in the September quarter while its loan and advances were up 12.3 per cent during the same period. In a filing to BSE post-Wednesday’s trading hours, the bank said its deposits rose to Rs 1,12,074 crore at the end of September quarter against Rs 99,366 crore in the same quarter last year. Deposits were up 3.3 per cent over June quarter’s Rs 1,08,480 crore, the bank informed BSE.

Of particular interest is the growth in current account savings account (CASA) deposits, which surged by 10.5 per cent quarter-on-quarter and 6.5 per cent year-on-year, reaching Rs 43,161 crore.

Further, Bandhan Bank reported a 7.4 per cent quarter-on-quarter increase and a 12.6 per cent year-on-year growth in retail deposits, totalling Rs 82,977 crore.

In contrast, bulk deposits showed a decline of 6.9 per cent quarter-on-quarter but still demonstrated a substantial 13.2 per cent year-on-year growth, amounting to Rs 29,098 crore.

A notable metric to highlight is the CASA ratio, which stands at 38.5 per cent. This represents an increase from the previous quarter’s 36 per cent and a slight dip from the year-on-year ratio of 40.8 per cent.

In its Q2 preview note, Nuvama Institutional Equities said despite weak earnings in the June quarter, shares of Bandhan Bank have jumped 17 per cent on account of media reports that the new ED joining Bandhan Bank will be from HDFC Bank.

“Bandhan is likely to get a new ED soon. It is highly probable that it will be from a large private bank. However, the purpose of having one more ED is to strengthen the management team. Hence, it is unlikely to be a management transformation story like MMFS,” Nuvama said as it suggested a ‘Hold’ on the stock.

“Bandhan gave a strong update with loans growing 4 per cent QoQ and deposits 3 per cent,” it said while expecting NIM for Q2 may decline 12 basis points QoQ.

“Opex to rise with higher spends in the quarter despite weak loan growth. Write-offs will determine the level of credit cost. We assume flat QoQ credit cost. Slippage to remain elevated. Ex-ECLGS, slippage in Q1FY24 was at Rs 1,300 crore. We reckon it will remain at this level in Q2FY24 as well,” the brokerage said.

Nomura India said while non-performing loan (NPL) recoveries from CGFMU (credit guarantee scheme for microfinance) were expected in Q2, there were no update from the bank in that regard. “We believe procedural delays may result in these recoveries now being pushed out to Q3 (againstQ2 as expected earlier). We await clarity from management in this regard,” the brokerage said.

Brokerage firm Geojit Financial is bullish on Bandhan Bank and has recommended a ‘buy’ rating on the stock with a target price of Rs 269 in its research report dated August 21, 2023.

Bandhan Bank stock has given a return of 22.52 per cent over the last six months. The benchmark Nifty Bank index has given a return of 7.23 per cent over the same duration.

Shares of Bandhan Bank ended at Rs 253.90, down by Rs 0.050, or 0.020 percent, on the BSE.