At Bandhan Bank, asset quality issues play spoilsport in Q1
Live MintBandhan Bank Ltd disappointed investors with its muted June quarter earnings performance. View Full Image Graphic: Mint The bank’s management expects recoveries to improve from Q2 onwards and that could aid its asset quality outlook. “The management had earlier guided for a reduction in overall stress pool ; however, we opine recoveries by way of improved collections and repa-yments from government guarantees could take longer, reflecting in a moderate rise in cumulative credit costs," an HDFC Securities Ltd report said. What’s more, at a time when most large banks are reporting double-digit loan growth, Bandhan Bank’s loan growth came at 8% year-on-year to ₹98,197 crore. “The stock’s re-rating prospects depend on consistent improvement in asset quality metrics and loan growth which could lead to a sustainable return on asset of over 2.5% and return on equity of over 20% in FY24," Yuvraj Choudhary, analyst, Anand Rathi Institutional Equities, said.