Bandhan Bank Q2 Updates: Total Deposits Surge by 27.2%

Introduction:

  • Total Deposits: Bandhan Bank reported a massive 27.2% 12 months-on-year growth in general deposits, reaching Rs 1.43 lakh crore in Q2 FY2024. This increase shows sturdy patron self assurance and a a success deposit mobilization approach.
  • Loan Growth: The financial institution’s loans and advances grew by using 21.4% to Rs 1.31 lakh crore, up from Rs 1.08 lakh crore in the identical area closing 12 months, showcasing sturdy call for for credit score amidst a recovering financial system.

CASA Ratio: The CASA (Current Account Savings Account) ratio saw a slight decline to 33.2%, down from 38.5% last year. A lower CASA ratio suggests an increased reliance on higher-cost funding, which could pressure net interest margins in the future.

Retail Deposits: Retail deposits, including CASA, increased by 4.9% to Rs 96,603 crore from Rs 82,981 crore a year ago. Bulk deposits also saw an 11.7% rise, reaching Rs 29,098 crore.

Management Changes: The bank announced the resignation of Chief Audit Executive Ravi Lahoti, effective December 21, as he seeks new opportunities.

Bandhan Bank Q2 FY2024: Strong Deposit Growth Amid Asset Quality Concerns:

Financial Performance:

In Q1 FY2024, Bandhan Bank reported a 47.4% surge in profit to Rs 1,063.4 crore, surpassing analyst expectations. The bank’s net interest income grew by 20.6% to Rs 3,005.1 crore, while other income rose 36.9% year-on-year to Rs 527.5 crore.

Asset Quality Concerns:

Despite strong deposit and loan growth, the bank’s asset quality showed signs of deterioration. The gross non-performing asset (NPA) ratio increased by 39 basis points quarter-on-quarter to 4.23%, while thenet NPA ratio rose to 1.15% from 1.11% in the previous quarter.

Market Reaction:

Following the updates, Bandhan Bank’s shares fell by up to 1.32%, closing 1.14% lower at Rs 186.86 on the NSE. Over the past year, the stock has declined by 26.39%, reflecting market concerns over asset quality and competitive pressures.

Out of 27 analysts covering the bank, 15 recommend a “buy,” 7 suggest a “hold,” and 5 advocate a “sell.” The average 12-month price target suggests a potential upside of 17.8%.

Conclusion:

While Bandhan Bank’s deposit and loan growth figures paint a positive picture, the decline in CASA ratio and worsening asset quality present challenges that management will need to address. Investors should monitor the bank’s strategy to improve its funding mix and asset quality in the coming quarters.

FAQ:

1. What was the total deposit growth for Bandhan Bank in Q2 FY2024?

  • Bandhan Bank reported a 27.2% year-on-year increase in total deposits, reaching Rs 1.43 lakh crore.

2. How did the bank’s loans and advances perform in the same period?

  • Loans and advances grew by 21.4%, amounting to Rs 1.31 lakh crore, compared to Rs 1.08 lakh crore in Q2 FY2023.

3. What is the current CASA ratio for Bandhan Bank?

  • The CASA ratio decreased to 33.2%, down from 38.5% in the same quarter last year, indicating a reliance on more expensive funding sources.

4. How much did retail deposits increase?

  • Retail deposits, including CASA, rose by 4.9%, reaching Rs 96,603 crore, compared to Rs 82,981 crore a year earlier.

5. Were there any significant management changes?

  • Yes, Chief Audit Executive Ravi Lahoti resigned and will remain until December 21 to pursue other opportunities.

6. How did Bandhan Bank perform in the previous quarter?

  • In Q1 FY2024, the bank reported a 47.4% increase in profit to Rs 1,063.4 crore and a 20.6% rise in net interest income to Rs 3,005.1 crore.

7. What concerns arose regarding the bank’s asset quality?

  • The gross NPA ratio increased to 4.23%, up 39 basis points from the previous quarter, while the net NPA ratio rose to 1.15%.

8. How did the stock market react to these updates?

  • Bandhan Bank’s shares fell by up to 1.32%, closing 1.14% lower at Rs 186.86. The stock has declined by 26.39% over the past year.

9. What do analysts think about Bandhan Bank’s stock?

  • Among 27 analysts, 15 maintain a “buy” rating, 7 suggest a “hold,” and 5 recommend a “sell.” The average price target indicates a potential upside of 17.8%.

10. What should investors watch for in the future?

  • Investors should monitor Bandhan Bank’s strategies for improving its CASA ratio and addressing asset quality concerns while maintaining growth in deposits and loans.

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