Bandhan Bank shares plummet as lender disappoints Street with weak Q2 results

Bandhan Bank shares took a beating on Thursday after the Kolkata-headquartered lender reported a disappointing set of quarterly financial results with a worsening asset quality. The Bandhan Bank stock, traded with the symbol BANDHANBNK, fell by as much as Rs 9, or 3.8 per cent, to Rs 229 apiece on BSE. 

After market hours the previous day, Bandhan Bank reported a net profit of Rs 721.2 crore for the July-September period, registering a rise of 3.4 times compared with the corresponding period a year ago but less than analysts' estimates.

The bank's net interest income (NII), or the difference between the interest earned and the interest paid, increased 11.4 per cent on a year-on-year basis to Rs 2,443.4 crore for the second quarter of the current financial year, according to a regulatory filing.

According to Zee Business research, Bandhan Bank was estimated to report a net profit of Rs 750 crore and NII of Rs 2,480 crore for the fiscal second quarter.

The lender's net interest margin (NIM), a key measure of profitability, decreased by 10 basis points sequentially to 7.2 per cent for the quarter under review.

The bank registered a sequential increase of 56 basis points (bps) in gross non-performing assets (GNPAs), or gross bad loans, as a percentage of total loans to 7.32 per cent for the quarter under review, and a 14-basis-point increase in net non-performing assets to 2.32 per cent. 

ALSO READ: Growth momentum likely to continue for banks in Q2 but margin pressure may persist

Provisions fell 50.3 per cent on a year-on-year basis to Rs 636.2 crore, according to the filing.

The Bandhan Bank management said the lender is seeing signs of an uptick in growth and is confident that it is on the expected growth trajectory.

EDITOR'S TAKE | 'No hope for recovery in asset quality'

Zee Business Managing Editor Anil Singhvi pointed out that the bank's September quarter results were weak with "no hope for recovery" in asset quality.

He suggests investors adopt a 'sell on rise' approach on Bandhan Bank shares.

The market wizard placed his price targets for the stock at Rs 231, Rs 227 and Rs 223, and suggested a stop loss at Rs 245.

How analysts view Bandhan Bank after lender's Q2 earnings announcement

CLSA downgraded Bandhan Bank to 'outperform' from 'buy' and reduced its price target for the stock by Rs 20 to Rs 270 after the earnings announcement. The brokerage's target implies an upside of 13.4 per cent in the stock from the previous close. 

Bandhan Bank (BANDHANBNK) shares: Past performance 

Bandhan Bank shares finished the September quarter with a gain of 3.9 per cent, better than a 2.4 per cent rise in the headline Nifty 50 index. 

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