Bandhan Bank Q3 Review - Balance Sheet Cleansing In The Final Lap; Earnings Set To Revive: Motilal Oswal

Motilal Oswal Report

Bandhan Bank Ltd. reported a muted Q3 FY23 characterised by sluggish business growth, tepid net interest income and elevated provisions. Margin contracted 50 basis points QoQ to 6.5%, hit by interest income reversals. However, the bank expects margin to improve as Dec-22 margin was higher at 7.3%.

Advances grew 2% QoQ to Rs 921 billion even as the micro finance institution portfolio declined 2%, supported by a healthy 14% QoQ growth in the non-MFI portfolio. Deposit growth was modest with current account and savings account ratio witnessing a sharp decline.

Bandhan Bank's gross non-performing asset/net non-performing asset ratios remained stable at 7.2%/1.9%, respectively, with provision coverage ratio at ~75% in Q3 FY23.

Slippages moderated to Rs 32.65 billion from Rs 39.54 billion in Q2 FY23. Excluding NPA, collection efficiency improved to 98% from 95% in Sep-22, while special mention account overdue in the MFI book dipped to 8.1% from 13.0% in Q2 FY23.

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