Bandhan Bank - Q2FY21 First Cut - ICICI Securities

(CMP - Rs. 304; MCap Rs. 48931 crore)

Bandhan Bank has posted decent operating performance with asset quality helped by SC order on asset classification and lower provisions.

Q2FY21 Earnings Summary

- Bandhan Bank has on the operating front posted decent results with the NII increasing by 25.8% YoY and 6.2% QoQ to Rs. 1923 crore, helped by 14.2% YoY growth in the advances. Net interest margin for the quarter contracted by ~20 bps YoY and 15 bps QoQ to 8.0% as a result of faster decline in yields which declined by 30 bps QoQ to 13.3% as compared to cost of funds which were down by 20 bps QoQ to 6.2%.Other income for Q2FY21 showed a muted growth of 6% YoY to Rs. 382 crore. Cost to income ratio (calculated) declined by ~14 bps YoY to 29.4% but increased sequentially by ~15 bps. Collection efficiency for Emerging enterprise business has improved to 89% for the month of Sep'20 and 91% in Oct'20. Collection in housing segment has touched 98% level in September 2020

- Asset quality improved on a sequential basis as GNPA and NNPA for Q2FY21 declined by ~25 bps and ~12 bps to 1.18% and 0.36%, however, asset quality got benefit from Supreme Court's order as a result some accounts were not classified as NPAs. On standstill asset classification basis, bank's GNPA and NNPA would have increased by ~11 bps and ~36 bps to 1.54% and 0.72%, respectively

- Advances growth stood at 14.2% YoY and including TLTRO the book grew by 19.4% YoY to Rs. 76614 crore. Growth in loans was driven by 27% YoY rise in Emerging enterprise business segment (micro finance segment) while mortgages growth was flat on YoY basis. Deposits increased by 34.4% YoY in which CASA deposits jumped by 56.2% YoY. CASA ratio increased by 11 bps QoQ to 38.2%

- The bank has made provisions worth Rs. 394 crore of which Rs. 300 crore pertains to Covid-19, taking outstanding provisions at Rs. 2096 crore, of which Rs. 2010 crore is prudent provisions over and above regulatory requirement while Rs. 85 crore are for loans under moratorium. Net profit for the quarter posted a decline of 5.3% to Rs. 920 crore, profit growth was impacted on account of lower tax rate in the same quarter last year. Tax rate for Q2FY21 at 25.4% vs. 16.3% YoY

We will be coming out with a detailed report soon.

Shares of Bandhan Bank Ltd was last trading in BSE at Rs.300.85 as compared to the previous close of Rs. 289.25. The total number of shares traded during the day was 689024 in over 10951 trades.

The stock hit an intraday high of Rs. 307.9 and intraday low of 292.85. The net turnover during the day was Rs. 207923133.

Source : Equity Bulls

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