Motilal Oswal's research report on Bandhan Bank
Bandhan Bank (BANDHAN) reported a muted 3QFY23 characterized by sluggish business growth, tepid NII and elevated provisions. Margin contracted 50bp QoQ to 6.5%, hit by interest income reversals. However, the bank expects margin to improve as Dec’22 margin was higher at 7.3%. Advances grew 2% QoQ to INR921b even as the MFI portfolio declined 2%, supported by a healthy 14% QoQ growth in the non-MFI portfolio. Deposit growth was modest with CASA ratio witnessing a sharp decline. GNPA/NNPA ratios remained stable at 7.2%/1.9%, respectively, with PCR at ~75% in 3QFY23. Slippages moderated to INR32.65b from NR39.54b in 2QFY23. Excluding NPA, CE improved to 98% from 95% in Sep’22, while SMA overdue in the MFI book dipped to 8.1% from 13.0% in 2QFY23.
Outlook
We continue to remain watchful of asset quality and the high SMA book, which can keep credit cost elevated. We thus estimate an RoA/RoE of 2.7%/22.4% in FY25 and maintain Neutral with a TP of INR270 (premised on 1.8x Sep’24E ABV).
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!