Bandhan Bank Q4 Results Review - PPoP Inline; Higher Write-Off Drags Down Earnings: Motilal Oswal

Motilal Oswal Report

Bandhan Bank Ltd. posted Q4 FY24 profit after tax of Rs 546 million (94% miss) due to higher provisions as the bank has technically written off bad loans pertaining to pending Credit Guarantee Fund for Micro Units claim as a prudent measure.

Net interest income grew 16% YoY to Rs 28.7 billion (7% beat) as margins expanded 40 bp QoQ to 7.6%.

Advances grew at a healthy 15.6% YoY/9.9% QoQ. MFI share in the total loan book stood at 50%, with the o/s book size at ~Rs 622 billion. Bandhan Bank's deposit growth was robust at 25% YoY/15% QoQ with current account and savings account mix of 37.1%.

Gross/net non-performing asset ratios improved 318 bp/110 bp QoQ to 3.8%/1.1%, while slippages improved to Rs 10 billion versus Rs 13.9 billion in Q3 FY24. MFI-SMA book declined 130 bp QoQ to 2.0%, which will enable lower a slippage rate going ahead. Collection efficiency was steady at 99%.

We cut our earnings estimates for FY25 by 2.4% and expect FY26E return on asset/return on equity at 1.9%/17.4%. Retain Neutral with a target price of Rs 200 (1.3 times FY26E adjusted book value).

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