How were the results of Bandhan Bank and is the stock looking to put its worst fears behind?

Bandhan Bank reported 17.34% higher revenues at Rs.3579 crore for the Sep-20 quarter. The operating profits grew 24.53% at Rs.1627 crore while the net profits fell 5.33% to Rs.920 crore on the back of a surge in provisioning for doubtful debts from Rs.145 crore to Rs.395 crore.

The impact was felt in margins too as the OPM was up by 260 bps at 45.47% while the net profit margins fell by 600 bps to 25.70%. This fall was largely on the back of a spurt in loan loss provisioning. The company also announced growth in deposits of 34% while loans grew 19.4% on a yoy basis.

The good news on the deposit front is that the CASA deposits consisting of low cost current and savings accounts grew by 56% to constitute 38.2% of the total deposit base. This ensures lower overall cost of deposits.

On the asset quality front, GNPAs fell sharply to 1.18% as its Eastern and North Eastern portfolio have been more or less managed or at least bottomed out. With net NPAs at just 0.36%, most of the immediately losses are fully provided for. That adds to the attractiveness of the bank.