This leading microfinance-turned-bank is known for its focus on underserved segments. This article provides a sneak peek into expert commentary, specifically CLSA’s assessment, regarding the bank’s current business performance, challenges, and future outlook as it navigates a competitive banking landscape. Key insights from the analysis follow.
Bandhan Bank Limited’s stock, with a market capitalisation of Rs. 29,190 crores, rose to Rs. 183, hitting a high of up to 1.52 percent from its previous closing price of Rs. 180.25. Furthermore, the stock over the past year has given a return of 14 percent.
Analyst Views On Bandhan Bank
CLSA has reiterated its ‘outperform’ rating on Bandhan Bank, highlighting its solid fundamentals and long-term growth potential despite recent near-term challenges.
The brokerage believes that the bank’s scale, underlying momentum, and improving asset quality are not fully appreciated by the market at present. In its latest note, CLSA emphasises that while some operational headwinds exist, the bank’s core strength and strategy position it well for a recovery.
In Q4, Bandhan Bank delivered stable core operating performance, meeting expectations. However, a 25% year-on-year drop in profit after tax was recorded, mainly due to higher-than-expected slippages, which rose 8% above estimates.
Microfinance (MFI) slippages increased from Rs. 12,000 crore to Rs. 13,500 crore, weighing heavily on performance, though the non-MFI portfolio remained stable. Loan growth slowed to 9% year-on-year, compared to 15% in the previous quarter, and net interest margin (NIM) contracted by 20 basis points to 6.7%.
However, early signs of stress are easing, particularly in the MFI book, where the 0 to 90-day delinquency rate improved by 50 basis points to 3.3%. April’s collection trends were also encouraging.
Looking ahead, Bandhan Bank has cut savings deposit rates by up to 300 basis points, which, along with excess liquidity, could compress NIMs in the short term. However, CLSA sees this as a potential advantage later when loan demand picks up.
The brokerage has revised FY26 profit estimates downward by 6%, acknowledging the pressure from higher credit costs expected in the first half of FY26. Still, it maintains a positive outlook for the second half of FY26 and beyond, keeping FY27 projections unchanged.
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FY25 Financial Highlights
In FY25, the company reported solid performance with Net Interest Income (NII) at Rs. 11,491 crore, up 11 percent YoY, and Net Total Income growing 16 percent YoY to Rs. 14,458 crore.
Operating profit stood at Rs. 7,389 crore (+11 percent YoY), while PAT surged 23 percent YoY to Rs. 2,745 crore. Return ratios remained healthy with RoA at 1.5 percent and RoE at 11.6 percent. However, NIM for the year declined by 28 bps YoY to 7.1 percent, and credit cost improved by 50 bps to 2.9 percent.
In Q4FY25, gross advances rose 10 percent YoY and 4 percent QoQ to Rs. 1.37 lakh crore, while total deposits increased 12 percent YoY to Rs. 1.51 lakh crore. Net Total Income came in at Rs. 3,456 crore, with Operating Profit at Rs. 1,571 crore.
PAT jumped to Rs. 318 crore, compared to Rs. 55 crore in Q4FY24, which was impacted by a one-off write-off. NIM for the quarter was 6.7 percent, and credit cost stood at 3.9 percent.
Written By Fazal Ul Vahab C H
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