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  • 20 Jan 2023
  • ICICIdirect

MARGIN COMPRESSION, HIGHER PROVISIONS DENT OVERALL PERFORMANCE - BANDHAN BANK LATEST QUARTERLY RESULT

BANDHANBNK - 165 Change: -0.38 (-0.23 %)

Bandhan Bank – Q3FY23 First Cut

(CMP – Rs 237, MCap - Rs 38,184 crore)

Q3FY23 Earnings Summary

Bandhan Bank reported a weak set of numbers. Management had earlier indicated that slippages will remain elevated in the near term and thereby provisions

NII declined 2.1% YoY, 5.1% QoQ to Rs 2080 crore, as NIMs compressed by 50bps QoQ (130 bps YoY) to 6.5%. The meaningful decline in NIMs is attributed to interest reversals during the quarter. Yields up by 60bps QoQ to 12.6%

Other income more than doubled on QoQ basis (up 45% YoY) at Rs1033 crore, mainly due to Rs414 crore recovery from sale of stressed portfolio. Excluding the recovery, other income declined ~13% YoY

C/I ratio jumped from 31.3% to 38.3% due to continued investment in franchise. Sequentially provisions increased 20.5% to Rs 1541 crore. Thus, net profit for the bank de-grew 66.2% YoY to Rs 290.6 crore

Asset quality stood largely steady with GNPA ratio at 7.15% and NNPA ratio at 1.86%. The bank has received Rs915 crore under CGFMU and Rs800 crore from sale of stressed pool. Collection efficiency for West Bengal and Assam improved from 95% to 96% and 88% to 90% respectively (QoQ)

Business growth slowed down on a yearly basis as loans (gross) were up 11.1% YoY to Rs 97787 crore and sequential growth of ~2%. EEB segment de grown by ~8% YoY while non-MFI segments witnessed strong growth, which is in line with restructuring of balance sheet as articulated earlier by the management

Deposits were up 21.0% YoY, 2.9% QoQ to Rs 102283 crore wherein CASA was down 3% YoY resulting in contraction in CASA ratio at 36.4% vs 40.8% in Q2FY23 and 45.6% in Q3FY22

View: Balance sheet restructuring is in progress, however operationally volatile performance continued. Management commentary on key business segments and margins is monitorable. 

Impact: Neutral