Bandhan Bank was incorporated in 2015 as the RBI granted a universal banking license. The bank has a strong presence in eastern and north-eastern India with MFI loans being its forte and acquisition of Gruh finance boosted home loan book.
Overall weak performance
Balance sheet restructuring is in progress & performance continues to be volatile due to higher stress in EEB segment. Expected stability at lower return ratios to keep stock performance muted.
Rolling to FY25E, we value Bandhan Bank at ~1.9x FY25E ABV and revise our TP from ₹ 300 to ₹ 265. Steady state performance will be key for re-rating.
Besides Bandhan, in our coverage we also like HDFC Bank.
|Particulars||FY20||FY21||FY22||3 year CAGR_(FY19-FY22)||FY23E||FY24E||FY25E||3 year CAGR_(FY22-25E)|
|Q3FY23||Q3FY23E||Q3FY22||YoY (%)||Q3FY23||QoQ (%)||Comments|
|NII||2,080||2,282||2,125||-2.1||2,193||-5.1||Owing to slower business growth and NIMs contraction|
|NIM (%)||6.5||7.2||7.8||-130 bps||7.0||-50 bps||Impacted on account of interest reversal|
|Other Income||1,033||855||712||45.1||476||116.9||Aided by income on recovery from sale of stressed account|
|Net Total Income||3,114||3,137||2,837||9.8||2,669||16.6|
|Other Operating Expenses||505||454||368||37.3||450||12.1||Continued investment in franchise kept CI higher|
|Provision||1,541.5||1,582.2||805.7||91.3||1,279.7||20.5||Credit cost increased to 6.4% vs 5.3% of advances|
|PAT||290.6||300.3||859.0||-66.2||209.3||38.8||PAT impacted by weak topline & higher provisions|
|GNPA||6,965||7,962||9,442||-26.2||6,854||1.6||Asset quality steady in % terms|
|Advances (Gross)||97,787||1,02,077||87,998||11.1||95,830||2.0||YoY healthy growth driven by non-MFI segment|
Q3FY23 Earnings Conference call highlights
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