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Aditi Sharma made post

How do you see the Bandhan Bank results and does it make reason to buy the stock?

Answer
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Aashna Tripathi answered.
7 months ago


Let me run you through the results of Bandhan Bank first. Net Profit for the December 2019 quarter more than doubled to Rs.731 crore. However, this includes the integration of Gruh Finance and hence may not be strictly comparable. Net Interest Income (NII) for the December 2019 quarter was up by 37.10% at Rs.1,541 crore while the non-interest income grew by 52.99% to Rs.358 crore. NIM stood at 7.9% against 10.5% last year but this was due to the merger effect of Gruh Finance. Bandhan Bank has shown smart growth in total business. Total Advances (on book + off book) grew 83.87% to Rs.65,456 crore as on December 31, 2019. For the same period, total deposits increased by 58.51% to Rs.54,908 crore.

The stock price has been under pressure and there are a number of reasons. Bandhan Bank still has a very strong exposure to the Bengal and Assam regions and these regions have taken a hit due to the anti-CAA agitations. Also, Assam government has expressed serious reservations about the strong arm tactics adopted by the bank in the past. This could lead to collections and bad assets growing in this region. Also, there are issues of dilution off promoter equity by the RBI and that is not yet addressed. Due to the overhang of these issues, you would be better off waiting for a couple of quarters before the full impact of Gruh integration can be known. By then, a clearer picture of Assam and Bengal markets will also emerge.