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Tag: Bandhan Bank

  • RBI appoints retired CGM Singh on Bandhan Bank board

    RBI appoints retired CGM Singh on Bandhan Bank board

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    The Reserve Bank on Monday appointed A K Singh as an additional director on the board of Bandhan Bank.

    The appointment of Singh, a career central banker who retired as chief general manager of RBI, is for one year, the Kolkata-headquartered lender said in a regulatory filing. Bandhan Bank, however, did not specify the factors which have necessitated Singh’s appointment. There are not too many instances of such actions by the central bank.

    A recent precedent would include appointing a serving RBI official on the board of private sector lender RBL Bank, following reports of certain concerns in the running of the bank.

    It may be noted that the development comes ahead of Bandhan Bank’s founder and chairman C S Ghosh’s retirement from the bank on July 9.

    The microlender turned bank is grappling with a high proportion of stressed advances and has been wanting to reduce the share of unsecured loans in the overall pie.

    The Bandhan Bank scrip closed 0.67 per cent down at ₹207.75 a piece on the BSE on Monday, as against gains of 0.17 per cent on the benchmark.

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  • Banks, NBFCs’ provisional Q1 figures show robust credit, deposit growth

    Banks, NBFCs’ provisional Q1 figures show robust credit, deposit growth

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    Provisional figures for Q1FY24 released by banks and NBFCs show that both credit and deposit growth remained robust during the quarter led by sustained demand for retail credit and pick-up in corporate loans.

    Of the numbers declared so far, most lenders posted growth in advances or AUM (assets under management) of over 14 per cent with sector leaders HDFC Bank and Bajaj Finance seeing growth of 16 per cent and 32 per cent y-o-y, respectively. Other major lenders such as M&M Financial Services, IndusInd Bank, IDFC First Bank, RBL Bank, and Federal Bank saw loan growth of 20-28 per cent, similar to last quarter.

    While Q1 is typically a slower quarter for lenders, most of these players also reported 4-6 per cent growth in advances sequentially.

    Sustained credit growth, especially by retail-oriented lenders, reflects that domestic consumption and the demand for credit remains strong, despite rising interest rates and elevated inflation.

    YES Bank and Bandhan Bank continued to underperform the sector, posting credit growth of below 15 per cent, in the range of 6-8 per cent y-o-y. Both the lenders have been running down their microfinance and corporate exposures, respectively, leading to overall muted growth. Bandhan Bank’s advances fell 5.5 per cent on quarter.

    Deposit accretion too maintained its momentum and most major lenders reported deposit growth of over 13 per cent y-o-y, barring RBL Bank, South Indian Bank, and Dhanlaxmi Bank. Sequential trends too showed steady deposit growth, albeit RBL Bank, YES Bank, Bandhan Bank, and Dhanlaxmi Bank likely slowed down deposit mobilisation due to muted loan growth. CSB Bank’s deposits were 0.1 per cent lower sequentially.

    HDFC Bank saw muted q-o-q growth in both advances and deposits, as the bank is expected to have minimised balance sheet growth ahead of the merger of HDFC with itself effective July 1. The lender’s advances were up 0.9 per cent and deposits 1.6 per cent.

    Banks such as HDFC Bank, IDFC First Bank, Federal Bank, YES Bank, and Bandhan Bank saw their deposits growing faster than advances on a y-o-y basis. Bajaj Finance’s fixed deposits also surged by 46 per cent, albeit on a much smaller base.

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  • Bandhan Bank tanks 7% as analysts cut FY23 EPS estimates by up to 40%

    Bandhan Bank tanks 7% as analysts cut FY23 EPS estimates by up to 40%

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    Shares of Bandhan Bank took a beating, falling over 7 per cent in Monday’s trade after a sharp rise in September quarter slippages triggered an up to 40 per cent drop in FY23 earnings per share (EPS) estimates for the private lender.

    Analysts noted that slippage for Bandhan Bank were at an all-time high of 21 per cent. The bank wrote-off Rs 3,500 crore or 4 per cent of loans, its second largest write-off after 2 per cent of loans in Q4FY21.

    “Despite a tedious slippage situation, the SMA pool remains unchanged sequentially, implying high slippage even in Q3FY23,” said Nuvama Institutional Equities, which has cut its EPS estimate for Bandhan Bank by 40 per cent for FY23 and 19 per cent for FY24.

    “We cut target multiple sharply to 1.8 times from 2.2 times to reflect the high frequency of weak business cycles. We downgrade from ‘BUY’ to ‘HOLD’ despite the stock’s recent underperformance and cut target price to Rs 280 from Rs 370,” the brokerage said.

    The scrip fell 7.20 per cent to hit a low of Rs 246.10 on BSE. 

    Motilal Oswal said it remains watchful of asset quality and the high SMA book, which can keep credit cost elevated. The management has raised its credit cost guidance for FY23 to 3 per cent from 2.5 per cent earlier and guided at lower than trend growth due to tighter underwriting. Motilal Oswal has cut its FY23 EPS earnings estimate by 18 per cent and FY24 estimate by 11 per cent.

    Kotak Institutional Equities has cut its fair value on the stock to Rs 300 from Rs360 earlier as it values the stock  at 2.2 times book value and 9 times June 2024E EPS.

    The brokerage said it has cut its estimates sharply to reflect weaker revenue growth and higher provisions.

    The scrip has fallen 27 per cent in the last six months and Kotak said investors’ lack of conviction is reflected in the stock’s underperformance in recent quarters.

    “Our positive rating essentially is a play that the asset quality would recover, the deposit franchise is strong despite these challenges and the high RoE would be eventually get reflected in higher multiples. However, timing this recovery has not been easy,” it said.

    Also read: Every mother is a CFO, took basic lessons from her: Bandhan Bank MD & CEO

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