Bandhan Bank Q1 results preview: Here what brokerages expect

In the initial phase of the earnings season, Bandhan Bank is scheduled to announce its earnings for the quarter ended on June 30, 2023 on Friday. Analysts expect a mixed bag of numbers from the lender while the operation's performance is seen to be largely on the muted side.

A majority of brokerages see Bandhan Bank to report a flattish performance in the net-interest income (NIIs) in the range of Rs 2,450-2,525 crore, with net interest margins (NIMs) contracting on both year-on-year (YoY) and quarter-on-quarter (QoQ) basis. Profit after tax (PAT) is also seen to report a degrowth as non-performing assets (NPAs) may rise in the first quarter of FY24.

Nirmal Bang Institutional Equities expects Bandhan Bank's NII to rise slightly to Rs 2,520.3 crore, with NIMs contracting 66 bps to 6.9 per cent in Q1. Pre-provision operating profit (PPOP) may drop up to 2 per cent to Rs 1,780.6 crore. PAT may tank 16 per cent YoY and 8 per cent QoQ to Rs 7,45.3 crore in the quarter.

Ahead of its results, shares of Bandhan Bank were trading slightly lower on Friday at Rs 215.5 on Friday. The scrip had settled at Rs 215.90 on Thursday. According to the market participants, management commentary about the margins and guidance are likely to be the key in the near future.

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Phillip Capital expects Bandhan Bank to report a degrowth in revenues at Rs 2,451.6 crore in June 2023 quarter, down a per cent QoQ and 2.5 per cent YoY. EBITDA is seen falling 5 per cent QoQ and 6 per cent YoY to Rs 1,704.8 crore, with EBITDA margins to drop to 6.99 per cent in Q1FY24. PAT is seen at 763.7 crore, falling 14 per cent YoY and 6 per cent QoQ.

Loan de-grew sequentially by 5.5 per cent and lack of MFI loan growth and rising cost of fund will impact NIM, GNPA to remain elevated due to higher 60-90 dpd in EEB. Credit cost to remain elevated as bank recognize the balance stress loan, said Phillip Capital in its report.

Kotak Institutional Equities also expects flat performance in terms of NIIs at Rs 2,508.6 crore, while PPOP is seen at Rs 1,730 crore, falling 5 per cent YoY and 4 per cent QoQ. The brokerage expects profit to be around Rs 824.3 crore, down 7 per cent QoQ, but up 2 per cent YoY.

"We expect loan growth of 8 per cent YoY but a decline on a QoQ basis. We could see NIM at 7.8 per cent as the portfolio is still re-pricing upwards. We expect slippages to be lower as most of the loans have slipped from the restructured loan portfolio. We should expect positive commentary on growth, recovery in business and return ratios for the bank," Kotak added.

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