Target: ₹340

CMP: ₹200.65

Bandhan Bank has reported a steady quarter with PAT at ₹730 crore (1.6 per centg q-o-q, 152.2 per cent y-o-y) driven by healthy growth in NII (3.4 per cent q-o-q, 21.4 per cent y-o-y) with NIMs at 7.2 per cent (flat q-o-q); and stable opex (1.1 per cent q-o-q, 18.8 per cent y-o-y). Growth momentum remained strong 8 per cent q-o-q, 19.6 per cent y-o-y) led by SME segment 22.1 per cent q-o-q, 78.9 per cent y-o-y), followed by retail segment (14.6 per cenrt q-o-q, 70 per cent y-o-y) and EEB book (7.5 per cent q-o-q, 10 per cent y-o-y).

Management indicated that of the ₹139 crore in gross slippages (of which EEB contributed to ₹990 crore), 45 per cent was in the month of Oct’23 which was attributed to the bank’s shift to core banking system which was immediately followed by festive season. Run rate of which normalised in the subsequent months. Management expects the run rate to further decline in the coming quarter.

Overall stress pool in EEB segment stands at ₹7,500 crore. (12.9 per cent of EEB loans) against which it holds provisions of 72 per cent. Though Bandhan’s recovery has lagged its other microloan peers, it is gradually catching up. With its nation-wide presence, diversification strategy and well-entrenched distribution network, we expect an RoA/RoE of 2.8/23 per cent by FY26.