Operationally good quarter for the bank, PAT grew by 47% yoy driven by strong loan growth and stable margins. Other income showed flat growth more due to change in the recognition of PSLC income. AUM growth was strong at 51%, margins remained stable at 9% which led to...

ICICI Securities Ltd | Retail Equity Research AUM growth continued to remain robust at 51% YoY to | 33373 crore. Micro loans (form 86% of advances) grew 47.3% YoY to | 28974 crore, while non micro loans grew 80.2% YoY NII growth continued to remain robust at 55.4% YoY to | 1077 crore led by AUM growth and strong margins at ~10.3%. Margins remained steady QoQ at 10.3%. Non-interest income grew 3.5% YoY to | 230 crore. The bank realised | 263 crore from sale of PSL...

Bandhan Bank reported a strong quarter in 2QFY19, with net profit at INR 4.88bn (+47% YoY, 10% above JMFe). Gross AUM growth was robust (+51% YoY), while disbursement growth was at 71% YoY. Gross NPLs were largely stable at 1.3%, while total provisions were slightly elevated at 1.1%, despite marginal reduction in PCR (330bps decline QoQ to 47%). Bandhan disclosed that it has an exposure of INR 3.9bn to the IL&FS; group (1.2% of AUM), which is currently classified as standard. Bank believes that the withdrawal of general permission to open branches by the RBI, does not materially impact balance sheet growth in the near term : a) Bandhan averages c. INR 350mn deposit per branch (vs 1.7bn , 1.4bn for...

As per the licensing condition for Bandhan Bank, shareholding of Non Operative Financial Holding Company (NOFHC) was to be brought down to 40% within three years from August 2015. However, the NOFHC was unable to adhere to the condition and currently holds ~82% in the bank. In a communication to the bank, the RBI has said the general permission to open new branches stands withdrawn while new branches could be opened with RBI approval. In addition, the regulator has mandated to freeze the remuneration of the MD & CEO at the existing level (| 2.4 crore...

We recently met Mr. Hiren Shah, Head of Investor Relations at Bandhan Bank (BBL), and gleaned incremental strategic insight into the performance and outlook of BBL. We currently do not have a rating on the stock. The following are the takeaways from our discussion: Microfinance interest rate leadership NBIE Values your patronage- Vote for The...

ICICI Securities Ltd | Retail Equity Research Bandhan started as Bandhan Konnagar, a non-governmental organisation (NGO) in 2001 providing microfinance services to socially and economically disadvantaged women in rural West Bengal. On April 9, 2014, RBI granted an in-principle approval to Bandhan Financial Services (BFSL) to set up a scheduled commercial bank. Bandhan Bank has demonstrated stellar advances growth at ~51% CAGR in the last five years despite AP crisis and demonetisation. Continued focus on...

report strong profitability net profits to grow at a CAGR of 39% over FY18-21E. Return profile is also estimated to be robust ROE/ROA 19%/3.7 over the next 2 yrs. Although valuations looks expensive (trading at 6.8x FY19E and 5.2x FY20E...

ICICI Securities Ltd | Retail Equity Research Advances growth continued to remain robust at 52% YoY to | 32590 crore, above our estimate. Micro loans (forms 85.8% of advances) grew 44.8% YoY to | 27979 crore while non micro loans rose 127% YoY from | 2068 crore in Q1FY18 to | 4614 crore in Q1FY19 NII increase was higher than estimate at 39.5% YoY to | 1037 crore led by robust growth in AUM and strong margins at ~10.27%. On a sequential basis, NIM increased ~100 bps from 9.3% in Q4FY18 to...

Bandhan's 1QFY19 results indicate strong momentum across all fronts (loan growth 52% YoY, deposits 37% YoY, earnings 47.5% YoY) as well as stability across key qualitative parameters (GNPLs flat QoQ, cost-income ratio 34.2%, down 140bps YoY). Microbanking loan book grew 45% YoY, while other retail loans were up 123% YoY on a low base. CASA deposits were up 84% YoY, with CASA ratio of 35.5%. NIMs benefitted from the recent capital raise to expand to 10.3% and Tier1 ratio now stands at 31.4%. Nonmicrobanking assets are now 14.2% of the loan mix. The bank added 0.39mn microbanking customers (+4.7% growth) and 0.25mn retail banking customers (11% growth). We upgrade our earnings estimates by 2%/5% for FY19/20 resulting into a revised TP of INR650...

Bandana Bank, despite being a former micro-finance players and considering the impact of demonetization, posted the lowest NPAs amongst scheduled commercial banks with a GNPA ratio of 1.25% & NNPA ratio of 0.58% as on 31st March 2018 . In absolute terms, gross NPA were `373.14 core compared with `86.26 cores and Net NPA stood at `172.90 core against `61.17 cores. However,...

Bandhan Bank, despite being a former micro-finance players and considering the impact of demonetization, posted the lowest NPAs amongst scheduled commercial banks with a GNPA ratio of 1.25% & NNPA ratio of 0.58% as on 31st March 2018. In absolute terms, gross NPA were ` 373.14 crore compared with ` 86.26 crores and Net NPA stood at ` 172.90 crore against ` 61.17 crores. However, on a sequential basis, Bank witnessed stable growth and reduction in bad loans with gross NPA ratio down from 1.67 % in the third quarter ending December 2017 Bank has taken various initiative too closely monitor asset quality, and expects asset quality to further improve and credit cost to decline in FY2019. The bank has been making provision at the higher rate of 1% for standard advances against the...

Bandhan Bank Ltd is a newly licensed commercial bank transformed from a microfinance in August 2015. Currently the bank has a network of 887 branches and 430 ATMs, remarkable growth within a short span of time. They largely focusing on serving underpenetrated and underbanked rural markets of India. As on 9MFY18, the bank's net advances stood at Rs22,931cr against Rs12,438cr in FY16. On the liability side the bank has build a strong base of current account and savings account deposits with a healthy CASA ratio of 33.2%. The company...

Incorporated in 2014, Bandhan Bank Ltd. (BBL) is a commercial bank focused on serving under banked and underpenetrated markets in India. The bank currently offers a variety of asset and liability products and services designed for micro banking and general banking, as well as other banking products and services such as debit and credit card facilities, internet and mobile banking, online bill payment services and the distribution of third-party general insurance and mutual fund products etc. With a network of 2633 doorstep service centres (DSCs)...

Operating Model Focused on Serving Underbanked and Underpenetrated Markets: The Company's focus on underbanked and underpenetrated markets allows it to meet certain regulatory requirements. As the company focuses specifically on serving underbanked and underpenetrated markets, 29.15% of its banking outlets are located in unbanked rural areas and 96.49% of its Gross Advances are Priority Sector Lending (PSL)...

IPO NOTE

Bandhan Bank Ltd. (BBL), incorporated in 2014 is a Kolkata based commercial bank promoted by its founder, MD and CEO Mr. Chandra Shekhar Ghosh. BBL provides pan-India services with focus on micro banking and general banking services majorly serving under-banked and underpenetrated markets in India. BBL is the first microfinance company and the first in a decade that was granted a banking license. BBL started its operation as an NGO in 2001 which was transferred into India's largest microfinance company by number of customers and size of loan...

Bandhan Financial Services had received in principle approval from RBI to set up a Bank and it began its banking operations in August 2015 with the name Bandhan Bank Ltd (Bandhan). The bank has grown remarkably in a very short span of time. It primarily focuses on serving underbanked and underpenetrated markets in India (East and North Ea..

Bandhan Bank Ltd. (Bandhan Bank) was incorporated on December 23, 2014 and began operations on August 23, 2015 when Bandhan Financial Services Ltd. (BFSL), the parent company, transferred its entire microfinance to Bandhan Bank. Bandhan Bank's strength lies in microfinance, which includes a network of 2,633 doorstep service centres and 9.86mn micro loan customers. Since obtaining its banking license, Bandhan Bank has also focused particularly on creating a strong general banking business. It launched its general banking business on August 23, 2015 by opening a network of 501 bank branches and 50 ATM's, which as of Dec 31, 2017 has grown to 887 bank branches and 430 ATM's. Bandhan Banks's distribution network is...

Bandhan Bank, despite being a former micro-finance players and considering the impact of demonetization, posted the lowest NPAs amongst scheduled commercial banks with a GNPA ratio of 0.5% in fiscal year 2017. Bank’s loan book grew 35% in fiscal year 2017, the highest amongst scheduled commercial banks which is expected to increase considering the last quarter growth usually high . Additionally, since beginning operations bank have generated increasing non-interest income as a percentage of overall income, improving from 8.66% for March 2016 to 35.38% for the nine months ended December 31, 2017. This increase in non-interest income has helped to improve margins and returns. Further, it aims to garner more non-interest income to reduce the dependency on the core interest income. Going forward, we see the growth to continue as the bank focuses to serve in under banked and underpenetrated markets in India. The bank looks fairly stable in terms of asset quality even as some of its peers are struggling with high NPAs. We recommend our investors should subscribe to the IPO, And it could be a multibagger in long-term.