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Bandhan Bank: Weak performance amid elevated slippages

News: For Bandhan Bank, NII declined 8.5% QoQ and was flat on YoY basis to Rs.1935 crore mainly on account of fall in NIMs and tepid credit growth. Margins fell sharply by 90 bps QoQ to 7.6% as a result of rise in stress. Provisions were up sharply at Rs.5577 crore vs Rs.1442 crore in the previous quarter as the bank took accelerated provisions of ~Rs.1500 crore on NPA account, additional standard asset provisions of Rs.2100 crore and ~Rs.1030 crore on restructured assets. As a result of steep rise in credit cost, the bank posted a loss of Rs.3008 crore. Asset quality weakened as GNPA were up by 264 bps QoQ to 10.8%. Net NPA declined 25 bps QoQ due to sharp rise in provisioning. Restructured book stands at 10.2%. Business growth remained muted as gross loan book increased by 6.6% YoY to Rs. 81660 crore, in which EEB segment reported a growth of 8.6% YoY. Deposit showed healthy growth of 23.8% YoY and 5.9% QoQ to Rs.81898 crore, which was mainly driven by CASA growth of 44.6% YoY.

Views: We believe with steep rise in stress and uncertainty relating to recovery would remain an overhang on the stock and performance in key eastern states would be monitored.