bandhan bank share price: Bandhan Bank falls over 11%. Here’s why

Shares of private sector lender fell as much as 11.1% to Rs 235.75 in Monday’s intraday trade on the BSE after the bank reported a weak operational performance for the second quarter of the current financial year.

Bandhan Bank on Friday reported a net profit of Rs 209 crore for the September quarter as against a Rs 3,009 crore loss in the year-ago period, owing to a sharp fall in provisions and a rise in net interest income.

The bank made Rs 1,280 crore provisions in the September quarter against Rs 5,614 crore in the year-ago period. Net interest income rose 13.3% to Rs 2,193 crore.

The latest quarter’s provisions were, however, double of that made in the preceding quarter, which led to a 76.4% fall in net profit sequentially.

The bank’s net interest margin fell to 7% against 7.6% in the comparable quarter last year, due to Rs 298 crore of interest rate reversal on the restructured accounts, which slipped into sticky loans.

Write-offs of ageing bad loans to the tune of Rs 3,535 crore also impacted the NIM adversely in the quarter under review. The bank wrote off a total of around Rs 5,700 crore of delinquent loans in two phases after the pandemic.

The latest write-offs are entirely from the microfinance books, leading the loan portfolio to shrink to Rs 53,920 crore at the end of September from Rs 58,100 crore three months prior to that. Consequently, the share of unsecured microloans fell to 40% of total loans from 57% earlier.

The bank’s September quarter operating profit was 2% year-on-year lower at Rs 1,553 crore.

has a ‘buy’ call on Bandhan Bank with a target price of Rs 365. The time period given by the analyst is one year when Bandhan Bank’s price can reach the defined target.

“For an expected RoE of 22-23% over FY24-25E, the current valuations (1.8x FY24E ABV) seem reasonable. We thereby retain our ‘Buy’ recommendation purely on the basis of comfort on valuations and arrive at a revised target price of Rs 305/share (2.1x FY24E ABV),” said Axis Securities.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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