Bandhan Bank stock price surges 12% on healthy June quarter earnings

Bandhan in annual report said that the Bank will continue to focus on retaining its strength in the microfinance market, it will ensure that the agenda of diversification of the asset book is on track

Bandhan Bank stock rises: Shares of Bandhan Bank soared 12 per cent to Rs 215.3 on the Bombay Stock Exchange (BSE) in Monday’s intra-day trade after the company posted a 47 per cent jump in its net profit to Rs 1,063 crore for the June 2024 quarter (Q1FY25), due to a decline in bad loans.

The private lender's net profit stood at Rs 721 crore in the June quarter last year (Q1FY24).

The average trading volumes on the counter jumped over two-fold with a combined 55 million shares changed hands on the National Stock Exchnage (NSE) and BSE till 09:50 AM. The stock had hit a 52-week high of Rs 263.15 on January 4, 2024.

In Q1FY25, Bandhan Bank’s net interest income (NII) grew 20.7 per cent year-on-year (YoY) to Rs 3,010 crore. Margin was stable sequentially at 7.6 per cent.

In terms of asset quality, the bank's Gross Non-Performing Assets (NPAs) improved to 4.23 per cent of gross advances as of June 30, 2024, from 6.76 per cent in the April-June quarter of the previous fiscal. Net NPAs also declined to 1.15 per cent of the advances from 2.18 per cent a year ago.

While Bandhan Bank in its FY24 annual report said that the Bank will continue to focus on retaining its strength in the microfinance market, it will ensure that the agenda of diversification of the asset book is on track. Bandhan Bank will grow Housing Finance, Retail Assets and SME Lending to a larger share. The share of secured assets will also continue to increase.

The Bank’s future looks promising. With a capable leadership team, a robust franchise built on shared vision and values, and ongoing transformation, the management is confident that the Bank will continue to progress steadily, enriching the lives of all stakeholders and delivering sustainable long-term value, Bandhan Bank said.

Bandhan Bank reported a steady quarter with earnings beat propelled by controlled operating expenditure (opex) and provisions. NII growth was healthy, aided by stable margins.

Deposit growth was modest, however, management guided deposits to grow faster than advances. Asset quality deteriorated slightly, however, slippages moderated, while CE remained steady at 99 per cent, Motilal Oswal Financial Services said in result update.

Moreover, the bank, on a conservative basis, has increased the risk weights in the Emerging Entrepreneurs Business (EEB) book.

Furthermore, the management expects a positive outcome from the ongoing Credit Guarantee Fund for Micro Units (CGFMU) audit, which is to be completed shortly, the brokerage firm said in result update with ‘buy’ rating on the stock and target price of Rs 220 per share.