Stocks - Q : Quality | V : Valuation | PT : Price Trend
Funds - P : Performance | Q : Quality
Funds - P : Performance | Q : Quality
Bandhan Bank has shown early signs of improving its credit cost as well as asset quality.
Bandhan Bank maintained healthy business growth in Q1FY25, Deposits grew 22.8% YoY, higher than the advances growth, supported by 24.9% YoY growth in retail term deposit. This lead to NII growth of 21% YoY. Net interest income (NII) for Q1 FY25, stood at Rs.3,005 Cr compared to Rs.2,491 Cr for Q1 FY24.
Loan book growth was driven by Retail book (other than housing) which grew 83%, Commercial Banking grew 30%, EEB grew 22% and the housing book showed a growth of 13%.
On the liability side, deposits growth was mainly driven by term deposits (25% YoY); CASA grew 14% YoY but declined 360 bps QoQ. CASA growth was impacted due to reduction from short term current account balance of previous quarter. CASA ratio stands at 33.4% compared to 36% in Q1FY24.
Asset Quality
In last quarter bank had taken strategic decision to write off Rs 3,850 Cr of stressed assets. We had highlighted this in our previous quarterly update. Higher write-off helped the bank to improve its overall asset quality which is visible in this quarter. The bank's Gross Non-Performing Assets (NPA) have improved YoY to 4.2% in Q1 FY25 compared to 6.8% in Q1 FY24. Net NPA improved to 1.1% in Q1 FY25 vs 2.2% in Q1 FY24.
Gross slippages were lower at Rs. 890 Cr vs. Rs. 1,020 Cr in Q4FY24 and Rs. 1,360 Cr in Q1FY24. We have been cautious on the credit cost for the bank. But bank has shown early signs of improving its credit cost. For the Q1FY25 credit cost stood at 1.6% compared to 2.4% in Q1FY24. The commentary around MFI asset quality stress build-up across lenders has been alarming. Given Bandhan’s higher exposure to the MFI segment (49% portfolio mix), we remain watchful of asset quality metrics going ahead.The bank guided for credit cost of 1.8%-2% for FY25, and expects a credit cost of 2.5% for the EEB portfolio.
Return on Asset (ROA) of bank for quarter stood at 2.5% and ROE at 18.8% improved from 1.9% and 14% in Q1FY24.
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