Portfolio concentration weighs on Bandhan Bank, stock down 13% post results

Dependence on microfinance loans for growth is steadily increasing, which poses a risk in present environment

Bandhan Bank’s dominance in eastern India helped it bring in retail deposits (80 per cent of total deposits) and augment the share of its low-cost current account savings account (CASA) deposits to 43 per cent in the December quarter (Q3). 

However, its stock has lost about 13 per cent in two session after it announced its results, because its growing dependence on microfinance institution (MFI) loans is doing more harm than good at this juncture. 

Proforma gross non-performing assets (NPA) ratio — or NPAs unadjusted for the Supreme Court’s stay on bad loan recognition — rose to 7.1 per cent in Q3,