Bandhan Bank shares fall nearly 6% on CFO resignation; brokerages keep ‘Buy’ tag

Jefferies has a buy recommendation for Bandhan Bank, with a target price of Rs 340 per share.

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Shares of private lender Bandhan Bank fell nearly 6 percent in early trade on July 5 after its chief financial officer Sunil Samdani resigned.

Bandhan Bank on July 4 said that Samdani stepped down from the position on July 3, to explore professional opportunities outside the bank. His last working day as CFO and key managerial person (KMP) of the bank would be September 30, 2023.

“I am grateful to you for placing the trust in me and giving me the valuable opportunity to build a Bank of this size and stature,” Samdani said in his resignation letter.

The Bank is in the process of identifying a suitable candidate for the office of CFO and KMP, and the said appointment would be informed to the stock exchanges in due course, as per an official statement.

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The bank has come out with its Q1 (April-June) business update, in which its Loans & Advances stood at Rs 1,03,169 crore, down 5.5 percent quarter-on-quarter (QoQ) and up 6.7 percent, year-on-year (YoY).

The total deposits of the bank was up 0.4 percent QoQ basis at Rs 1,08,479 crore, while YoY basis it increased by 16.6 percent.

The Current Account and Savings Account (CASA) Deposits of the bank was down 8 percent QoQ, and 2.8 percent YoY at Rs 39,076 crore, while its CASA ratio stood at 36 percent versus 39.3 percent QoQ, and 43.2 percent YoY.

Nomura

Research house Nomura has kept buy rating on Bandhan Bank with a target at Rs 325 per share on the back of the CFO resignation and soft pre-Q1 update.

The bank has reported a decline of 5 percent in its loans growth compared to the previous quarter. However, there is a 7 percent increase in loans growth compared to the same period last year. It has reported muted growth in deposits, remaining flat compared to the previous quarter, while rose 17 percent, YoY.

CASA Deposits witnessed a decline of 8 percent, QoQ, however, there was a 3 percent increase on YoY basis. The CASA ratio down 330 basis points (bps), QoQ and down 720 bps, YoY.

The collection efficiency remained largely stable at 98 percent compared to the previous quarter.

Jefferies

Jefferies has a buy recommendation for Bandhan Bank, with a target price of Rs 340 per share. The Q1 loan growth moderated to 7 percent and CASA decline by 3 percent, YoY.

The moderation in loan growth is partly attributed to the rundown of short-term loans. The bank converted some of its CASA deposits into term deposits.

The collection fell slightly to 98 percent compared to 99 percent in March 2023. However, it remained higher than the level observed in June 2022.

The recent floods in Assam are expected to have a limited impact on Bandhan Bank. The loans in Assam account for approximately 1 percent of the bank’s loan portfolio or 3 bps of the total.

The CFO resigned to pursue another opportunity. It is crucial for the bank to ensure a smooth succession.

At 09:20 hrs Bandhan Bank was quoting at Rs 226.15, down Rs 5.10, or 2.21 percent on the BSE.

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