Bandhan Bank - Q4FY21 First Cut - ICICI Direct

(CMP - Rs. 297, MCap - Rs. 47835 crore)

Bandhan bank reported weak set of numbers for Q4FY21 with higher provisioning and interest reversals hurting profitability.

Q4FY21 Earnings Summary

- Asset quality on a reported basis saw a spike as GNPA ratio jumped from 1.18% to 6.81% QoQ, this was mainly due to removal of standstill asset classification norms. On proforma basis though asset quality appears to have improved from GNPA proforma level of 7.12% in the previous quarter but this was largely led by accelerated write-off worth Rs. 1930 crore during the quarter. The bank has done restructuring worth Rs. 617 crore i.e. 0.71% of its loan book. The bank holds accelerated provisions of Rs. 387.96 on standard assets against potential impact of pandemic and Rs. 62 crore where resolution under framework for Covid-19 is done

- Operating performance was marred by stress recognition as NII was down 15.2% QoQ to Rs. 1757 crore. This was mainly on account of reversal of Rs. 525 crore of interest due to NPA recognition. Net interest margin fell considerably from 8.3% to 6.8% QoQ. Other income was up 57% YoY and 42% QoQ to Rs. 787 crore. On account of lower top-line and increased cost due to business activity the C/I ratio was sequentially up to 32% from 27%. During the quarter the bank made total provisions worth Rs. 1594 crore of which additional NPA provisions to the tune of Rs. 1034 crore were against existing NPA resulting from elevated risk in certain geographies. As a result PAT was down 80% YoY to Rs. 103 crore

- Collection efficiency (incl. write-off) saw improvement from 92% to 95% QoQ in the micro banking segment. Key state of Bengal saw collections rise from 90% to 95% QoQ but in Assam collection efficiency dipped from 88% to 83%. Management commentary regarding stress built up in coming months would be key to watch

- Loan growth for the quarter was healthy on yearly basis at 22.5% YoY to Rs. 81613 crore but sequential growth trajectory was subdued at 1.7%. Deposit accretion during the quarter was also strong at 36.6% YoY to Rs. 77972 crore, this was helped by 61% YoY rise in CASA deposits. As a result CASA ratio increased from 36.8% to 43.4% YoY

We will be coming out with a detailed report soon.

Shares of Bandhan Bank Ltd was last trading in BSE at Rs.297 as compared to the previous close of Rs. 294.65. The total number of shares traded during the day was 932019 in over 13096 trades.

The stock hit an intraday high of Rs. 302.45 and intraday low of 291.3. The net turnover during the day was Rs. 276423787.

Source : Equity Bulls

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