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Bandhan Bank FY20 deposits rise 32% to Rs 57,073 crore

KOLKATA: Bandhan Bank said its deposits and advances grew 4% and 10% respectively quarter on quarter, in an effort to pacify investors and depositors who turned jittery following a 84% downward revision in price target by Ambit Capital.

“Deposits from micro banking customers continues to be strong and stable despite three weeks of lockdown,” Bandhan said in a regulatory filing to stock exchanges on Monday.

It said it has excess liquidity to the tune of Rs 8500 crore.

Year-on-year, the bank’s deposits grew 32% to Rs 57073 crore and advances grew 60% to Rs 71,825 crore. Bandhan’s share of current and saving account (CASA) deposit was a at a robust 37%.

“We continue to believe that Bandhan Bank is the most resilient franchise within microfinance — no-consumption based lending, no lending to migrant workers. We believe Bandhan, with a 23% tier 1 and strong CASA deposits, will survive this better than any competitor,” Gautam Chhugani, an analyst with Bernstein & Co said.

Ambit Capital however said that asset quality pressure would be most severe for Bandhan, along with RBL Bank and IndusInd Bank, among its peer lenders, given their higher shares of microfinance/ unsecured /commercial vehicle loans.

Ambit revised Bandhan’s share price target downwards by 84% to Rs 65 from a previous target of Rs 395, citing the bank’s 62% exposure to east India where leverage among borrowers is the highest due to rising ticket sizes over the past three years. “Even its corporate loan portfolio (5% of its loan book) is entirely exposed to MFIs/NBFCs, which are most exposed in the current environment,” the report said.

It cut Bandhan’s net profit prediction 5% to Rs 3000 crore in FY20 from a previous Rs 3200 crore while said the bank may see Rs 300 crore net loss in FY21.

Bernstein revised Bandhan’s net profit prediction 28% downwards to Rs 3071 crore for FY21 from its previous prediction of Rs 4286 crore.

Bandhan had booked Rs 1952 crore net profit in FY19.

“While the lockdown and restrictions adversely impact microfinance operations, it may be worth watching if the outbreak spares rural areas of India,” said Chhugani.

Bandhan share price was trading at 6.53% lower at Rs 179.75 on BSE at 11.15 in the morning.

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