Bandhan Bank posted a strong business boom in the traditionally busy fourth quarter. Domestic brokerage Motilal Oswal said the trend towards improving collection efficiency should continue to reduce credit cost and support earnings.
“However, the movement in the SMA book and the performance of the restructured book remains a key monitorable. we expect Bandhan Bank To deliver around 25% RoE by FY24. We maintain our neutral rating with a target price of 320 per share,” the note added.
Bandhan Bank on Tuesday said its loan book has exceeded 1 lakh crore figure for the first time in January-March 2022, registering a growth of 16% over the same period a year ago. the total debt of the bank was 1,01,359 crore during the fourth quarter of FY22.
Lender’s deposits grew by 24% year-on-year (YoY) 96,331 crore, out of which CASA (Current Account Savings Account) deposits grew by 18% 40,072 crore.
The loan coverage ratio (LCR) of the bank stood at around 129%, while the collection efficiency for the quarter stood at around 96%, up from the 93% recorded in the previous quarter.
For 4QFY22, Bandhan Bank posted healthy asset growth at 16% YoY/15% QoQ. Encouragingly, collection efficiency further improved in March 2022 to 95% in MFI and 96% overall, Jefferies analysts said.
“Bandhan Bank may witness negative net slippage (slippage < recovery) in 4Q; The bank has adequate provisioning buffer, which should keep credit cost low. The sharp fall in the CASA ratio due to higher bulk deposits should normalize in 1QFY23," the brokerage said. Jefferies has a buy tag on the bank stock with a target price of Rs. 318.7 per share.
Shares of Bandhan Bank have gained over 23% in the past one month, while the stock has lost nearly 8% in the one-year period.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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