Bandhan Bank

02 Nov

Collection efficiency improved by 16% in 2QFY22 – Bandhan Bank

Update on the Indian Equity Market:

On Tuesday, NIFTY closed flat at 17,890 (-0.2%) led by REALTY (+4.0%), PSU BANK (+2.4%), and MEDIA (+1.0%). Those in red were METAL (-2%), OIL & GAS (-0.8%) and HEALTHCARE (-0.6%). Top gainers in NIFTY50 were MARUTI (+2.2%), NTPC (+2%), and TITAN (+2%). The top losers were TATASTEEL (-3.4%), GRASIM (-2.2%), and JSWSTEEL (-2%).

Excerpts of an interview with Mr. Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank with CNBC-TV18 on 01st November 2021:

  • Asset quality is improving since the last quarter. In Q1, they faced a severe effect of the second wave of COVID-19, but from September it improved in a way that gives comfort to the bank and its future growth is coming
  • From Q1 to Q2, collection efficiency has improved by 16% and the Special Mention Account-0 (SMA-0) has become half, SMA-1 has come 25 percent down and SMA-2 is flat because they made higher provisions in this quarter.
  • Restructured book amount is ₹ 83.3 bn.
  • The second wave was severe than the first wave and the second wave entered the Eastern region which is Bandhan Bank’s core area in May. Hence, the May-June months were affected by that and the impact was seen in Q1FY22.
  • Eventually, August witnessed some improvement and September is when the bank saw a pick-up.
  • The Assam government has informed customers that if they don’t pay their respective dues, their credit history will be affected and they will not get credit in the future.
  • Ground-level customers are returning back and hence collection efficiency improved by 33% from June to September particularly in Assam.
  • Small borrowers are asking for time which is duly provided and it is seen that 66% of these borrowers are paying to the bank and NPA customers are also paying 65% to them
  • As a result, all of these customers don’t belong to the NPA bucket, they belong to the regular bucket.
  • Every day, 14,000 of Bandhan Bank’s customers are closing their loans which means they are coming to the regular category from the restructured and NPA one.
  • If this continues, the bank expects this to normalize in the next couple of months.

Asset Multiplier Comments

  • Bandhan Bank declared 2QFY22 earnings recently and reported a loss, impacted by significantly higher provisions. The Bank has provided for NPA to protect its balance sheet from the potential impact of a 3rd Covid wave.
  • With economic activity picking up ahead of the festive season, we believe credit growth will pick up. The bank is likely to be a beneficiary of this.

Consensus Estimate (Source: market screener websites)

  • The closing price of Bandhan Bank was ₹ 309/- as of 02-November-21. It traded at 3x/2x/2.1x the book value estimate of ₹ 102/130/150 for FY22E/ FY23E/FY24E respectively.
  • The consensus target price of ₹ 310/- implies a Price/book multiple of 2.1x on the FY24E book value of ₹ 150/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Bandhan Bank, Bank , , , , 0 Comments Read more...
12 May

Localised lockdowns impacting collection efficiency – Bandhan Bank

Update on the Indian Equity Market:

The Indian benchmark indices closed in the red for the second day, due to concerns over the impact of faster inflation on dollar flows into emerging markets. The Nifty50 ended the day at 14,697 (-1.0%), dragged by TATASTEEL (-4.8%), HINDALCO (-3.5%), and JSWSTEEL (-3.5%). The top gainers in the index were TATAMOTORS (+3.2%), TITAN (+1.6%), and MARUTI (+1.3%). The sectoral gainers were PSU BANK (+3.2%), MEDIA (+0.7%), and AUTO (+0.2%), while METAL (-3.0%), PRIVATE BANK (-1.6%), and BANK (-1.3%) led the sectoral losers.

Excerpts of an interview with Mr. Chandra Shekhar Ghosh, MD and CEO, Bandhan Bank (BANDHANBNK) published in Mint on 12th May 2021:

  • The complete impact of the second wave is yet to be felt, but Mr. Ghosh expects business to bounce back by June-21.
  • The impact of the second wave of the virus has been localised lockdowns. The advantage of localised lockdowns is businesses are still functional. There was a lack of access to villages and smaller localities last year, affecting collection efficiency.
  • Following localised lockdowns, collection efficiency has dropped 300-400bps from March-21. The drop has been due to complete lockdowns in certain areas and with branches in such areas, executives cannot go out for collections. This impact has been felt in April-21, he expects the efficiency to bounce back by June-21.
  • The microfinance part of their business is better off without moratoriums. In their case, borrowers repay if they can come to the bank’s offices or where the collection executives can reach. Wherever it is not permitted, the executives are not venturing out. Mr. Ghosh believes this is better than a moratorium, as nobody would want to repay under a blanket benefit.
  • The bank is providing loan restructuring if customers request it. The customers who are able to pay 50% or 75% in instalments are paying. The customers take it upon themselves to repay so that credit score isn’t impacted. About 78% of NPA (Non-performing Asset) customers have repaid in March-21.
  • He expects similar growth in credit growth in FY22 as last year (~20%).

Asset Multiplier Comments

  • As the bank has a higher exposure to rural and semiurban areas, there was a lower impact on its operations in 4QFY21. With lockdown restrictions imposed in rural areas as well due to the second wave, the bank may face issues with collection.
  • In the recently released 4QFY21 results, the Bank has recognised higher provisions for weaker borrowers adequately. While the impact of the second wave cannot be measured so soon, the bank is likely to maintain its conservative stance and maintain higher provisioning buffers going forward.

Consensus Estimate: (Source: market screener website)

  • The closing price of BANDHANBNK was ₹ 288/- as of 12-May-2021. It traded at 2.3x/ 1.9x the consensus book value estimate of ₹ 126/ 155 for FY22E/FY23E respectively.
  • The consensus target price of ₹ 384/- implies a PB multiple of 2.5x on FY23E BV of ₹ 155/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Bandhan Bank, Bank , 0 Comments Read more...
25 Aug

Housing Finance book is expected to grow five times in next five years – Bandhan Bank

Update on the Indian Equity Market:
Markets started the week on a positive note with Nifty50 rising 95 points higher at 11,466. Among the index, ZEEL (4.8%), KOTAKBANK (3.5%) and INDUSIND (3.3%) were the top performing stocks while POWERGRID (-2.0%), M&M (-1.2%) and ADANIPORTS (-1.1%) were the laggards. Within the sectoral indices, PVT BANK (2.4%), BANK (2.4%) and FIN SERVICE (2.1%) were the top performing sectors whereas REALTY (-1.0%), PHARMA (-0.4%) and IT (-0.3%) were the only the sectors closed the day in red.
Excerpts of an interview with Mr.Chandra Shekhar Ghosh, Managing Director & CEO, Bandhan Bank (Bandhan) published in Economic Times dated 23rd August 2020:
It is good that failure on large exposures happened very early into Bandhan Bank’s journey, which helped limit the losses and affirmed that it will never lend to the large segment again.
He said that there is a huge opportunity in the rural affordable housing segment. The focus is on housing finance space and the target is to grow the loan book by five times in the next five years to Rs 1 lakh crore. This, he expects will occupy nearly a third of the Rs 3.5 lakh crore lending book that the bank has targeted.
The business has had cycles of good growth, which gets followed with some impact due to changes in the overall environment beyond the bank’s control, and specifically mentioned demonetisation and the current COVID-19 pandemic which led to a full wipeout in collections.
When asked about setbacks like repayments impact due to the anti-CAA protests over the last year, he said till date, not a single rupee of loan has been written off in Assam and the reverses it faced because of the protests are a part of business.
After becoming a bank, its rate of lending has reduced to 17.95 per cent from 22.4 percent earlier and will reduce further as the share of the low-cost deposits will grow, he said, admitting that in the beginning, getting people to deposit was a challenge because the whole system had been tuned as a model focusing on lending and not liabilities.
Small borrowers prefer paying because they understand the importance of a commitment to repay and do not mind sharing the benefits of a growing business with the financier who helped make it possible. He also said more than the rate of interest, a borrower is more concerned with delivery of simple and timely credit for all.
Consensus Estimate: (Source: marketscreener website)
The closing price of Bandhan Bank was ₹ 295/- as of 24-Aug-2020. It traded at 2.7x/ 2.3x/ 1.9x the consensus Book Value estimate of ₹ 108/ 129/ 159 for FY21E/ FY22E/ FY23E respectively.
The consensus target price of ₹ 372/- implies a BV multiple of 2.3x on FY23E Book Value of ₹ 159.
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Bandhan Bank, Bank , 0 Comments Read more...
09 Jun

Bank has started collections in non- containment zones-Bandhan Bank

Update on the Indian Equity Market:

On Monday, Nifty closed 0.3%higher at 10,167. Among the sectoral indices, IT(+1.8%), PVT Bank (+1.3%), Bank (+0.7%)closed higher, whereas Media (-1.7%), PHARMA (-1.4%) and PSU Bank (-1.2%) closed lower. Among the stocks GAIL (+7.5%), IndusInd Bank (+7.3%),and BPCL (+7.0%) closed on a positive note.ZEEL (-4.5%), ShreeCement (-3.9%) and Eicher Motor (-3.4%) were among the top losers.

Excerpts from an interview of Mr.Chandra Shekhar Ghosh, CEO, Bandhan Bankwith Mint dated  8thJune 2020:

  • The pandemic has brought in a whole new set of risks for banks which are both internal and external.
  • The bank is asking its customers to use more digital modes of transaction in the changed scenario.
  • Branches were operational throughout the lockdown by observing government and administration rules.For Bandhan Bank, there were not many people working remotely.
  • He said some things can be done virtually. Earlier all regional managers were mandated to come to the head office for meetings but now the bank is doing it virtually and it is working.These efforts are saving expenses on travel.
  • Every sector cannot work from home and in banking some jobs might be possible but not all.
  • For Bandhan Bank, there is not a greater degree of acceptability to work – from- home.There are a lot of security issues related to bankers working remotely and that includes possible violations of agreements with customers, bound by data-security clauses.
  • The bank will have to take a deeper look into how these risks could be mitigated and only then banks will be able to move towards a work-from-home model.
  • On recoveries, he saidcollections have just started and at the ground level, the borrowers, especially in micro-credit involved in livelihood projects and agriculture, are continuing their businesses. Due to lockdown the bank is not being able to reach them.
  • The bank has started collections in the non-containment zone. However, the problem is that collection executives are facing difficulties in collecting loans from villages, as local residents are not allowing outsiders to access those places, citing covid-19 risks.
  • Speaking about post covid-19 opportunities, he said secured credit is the area where there are big opportunities.
  • There are customers who have been regularly paying all equated monthly installments (EMIs) and are eligible for more funds. These are small businesses which are running despite the lockdown.
  • When the rural demand recovers, pick-up in two-wheelers and other vehicles popularly used in these areas will see demand, and so will bank loans in these segments. Demand for gold loans is also coming quite strong.

Consensus Estimate: (Source: market screener and Investing.com websites)

  • The closing price of Bandhan Bankwas ₹ 264/- as of 8-June-2020.  It traded at 2.4x/ 2.0x theconsensus book value estimate of ₹ 107/127for FY21E/ FY22E respectively.
  • The consensus average target price for Bandhan Bank is ₹284/- which implies a PB multiple of 2.2x on FY22E BV of ₹127/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

By Bandhan Bank, Bank, Uncategorized 0 Comments Read more...
14 May

Will focus more on secured loans, as it looks to diversify loan book says Bandhan Bank’s Chandra Shekhar Ghosh

Update on the Indian Equity Market:

On Wednesday, NIFTY closed in the green at 9,383 (+2.0%). Top gainers in NIFTY50 were ZEEL
(+7.7%), Axis Bank (+7.0%) and ULTRACEMCO (+6.4%). The top losers were Nestle (-5.2%), Sun
Pharma (-2.2%) and Bharti Airtel (-1.1%). Sectoral gains were supported by Banks. Top sectoral
gainers were PSU Banks (+6.1%), Bank (+4.1%) and PVT Bank (+3.9%) and sectoral losers were
Pharma (-1.1%) and FMCG (-0.7%).

Excerpts of an interview with Mr. Chandra Shekhar Ghosh, CEO, Bandhan Bank Ltd with Financial
Express dated 13 th May 2020:

● Bandhan Bank expects around four weeks could be needed for normalisation of its
microfinance collections after the countrywide lock-down is lifted
● For microloan, 100% loan moratorium in value opted for April as they could not meet their
microfinance borrowers for collections due to the lock down.
● Around 79% of their microfinance borrowers have an average deposit balance of around Rs
3,070, which is equivalent to over four weekly instalments.
● Around 87% of their housing loan EMIs had come in April, while 65% (in value) of SME
instalments had come during the month. Around 41% (in value) of NBFC-MFI’s instalments
had been paid.
● They have started operations in microfinance business with opening offices in the green
zones across the country. They have disbursed some microfinance loans, though the amount
is very small.
● They will disburse more loans to micro-credit customers if they need because they know
their credit history for a long time. They have not yet started fresh disbursement in the non-
micro-credit sector (after the lock down is imposed).
● After restarting the operations, customers will look into their cash flow conditions.
Depending on that they will take a call on fresh loans.
● The faster the lock down is lifted, the faster they will get back to the pre-lockdown period in
terms of collections from different sectors. Until that happens there will be requirements for
supports from the RBI and the government. The loan moratorium has helped.
● Going forward, they would like to go for more diversification of their loan book, more
secured loan book than the current book.
● As of now, around 62% of their loan book is micro-credit. They would like to be more focus
on affordable housing and MSME sectors. Also, they would like to go for more geographic
expansion across the country.

Consensus Estimate: (Source: market screener and investing.com websites)

● The closing price of Bandhan Bank Ltd was ₹ 254/- as of 13-May-2020.  It traded at 2.3x/ 1.9x
the consensus earnings estimate of ₹ 111 /135 for FY21E/22E respectively.
● The consensus price target of Bandhan Bank Ltd is ₹ 316/- which trades at 2.3x the book value of
₹ 135/-

Disclaimer: The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisers to determine the merit, risks, and suitability of the information provided.

By Bandhan Bank, Bank 0 Comments Read more...
20 Jan

Repayment rates for all our loan portfolios very healthy: Chandra Shekhar Ghosh, Bandhan Bank

Update on the Indian Equity Market:

On Friday, NIFTY closed lower at 12,352. Among sectoral indices NIFTY Pharma (+1.7%), NIFTY Auto (+0.4%), NIFTY Media (+0.4%) closed higher. NIFTY Bank (-0.8%) and NIFTY Pvt Bank (-0.8%) were the losers. The biggest gainers were Bharti Airtel (+5.5%), Dr. Reddy (+3.0%) and Reliance (+2.8%) whereas Infratel (-11.1%), IndusInd Bank (-2.6%), and GAIL (-2.1%) ended with losses.

Excerpts from an interview of Mr Chandra Shekhar Ghosh (MD & CEO), Bandhan Bank with Economic times dated 15-01-2019:

  • There are two factors for profit growth; one is that they have controlled the non-performing assets. The repayment rates for all their loan portfolios have been very healthy which contributes directly to the interest income.
  • The second factor is their reach in rural areas, which at 70% while other private banks which have average deployments of 27%. Most of their business is in areas where costs are minimal, which is an advantage for them.
  • In his visits to most of their rural centres, he did not see any impact of the slowdown. There are talks at the top level, but at ground level, it is totally different.
  • They were a bit conservative in growing their books in the first three quarters. According to him, the next quarter the growth will normalize because the last quarters are generally strong.
  • They have taken a small portion of the reserves (₹200 crore) for additional provisioning due to political uncertainty as there have been talks of political unrest.
  • Normal repayment rates are above 98% on microfinance loans while in Assam it is over 99%. Three weeks ago, the repayment rates dipped to 78% in Assam because people couldn’t reach banks due to roadblocks and curfews. Within two weeks, it came back to above 93%.
  • About 16% of their microfinance loan book is in Assam. In some corners, there has been some political turmoil. They have made the provisions.
  • Penetration of housing loans is still low. They see opportunities in this segment.
  • MSME is a good market. However, there needs to be proper documentation by these businesses for banks to gauge repayment abilities and offer credit. Once awareness of these important aspects of documentation is spread, it’ll turn into a good opportunity.

Consensus Estimate (Source: market screener and Investing.com website)

  • The closing price of Bandhan Bank as on 17-January-2020 was ₹ 481/-. It traded at 4.9x / 3.9x / 3.2x the consensus Book Value for FY20E / 21E / 22E of ₹ 97.5/ 123.0/ 151.0 respectively.
  • Consensus target price of ₹ 641/- implies a Price to Book multiple of 4.2x on FY22E Book Value of ₹ 151/-

By Bandhan Bank, Bank 0 Comments Read more...