Bandhan Bank Share

Q: How much did Bandhan Bank's net profit grow in Q2 FY25?

The net profit grew by 30% YoY, reaching ₹937.4 crore.

Q: What caused Bandhan Bank’s strong performance in Q2 FY25?

Strong Net Interest Income growth, up by 20.7% YoY, contributed significantly to the bank’s performance.

Bandhan Bank’s Q2 FY25: Profit Soars with NII Surge—But Are Rising NPAs a Red Flag?

On Monday, shares of Bandhan Bank surged by 9.74% to ₹184.40 per share on the BSE following the release of its Q2 FY25 financials, which showed solid earnings growth for the quarter ending September 30, 2024.

Profit and Revenue Performance

The private lender reported a 30% year-on-year (YoY) increase in net profit for Q2 FY25, rising to ₹937.4 crore from ₹721.2 crore in Q2 FY24. This growth is largely driven by improved Net Interest Income (NII), which rose by 20.7% to ₹2,948.2 crore, compared to ₹2,443.4 crore in the same quarter last year. NII, the difference between interest earned from loans and interest paid on deposits, is a key profitability metric in the banking sector.

Asset Quality: Rising NPAs

However, the report also highlights challenges in asset quality. The bank’s Gross Non-Performing Asset (GNPA) ratio increased to 4.68% in Q2 FY25 from 4.23% in the previous quarter. Likewise, the Net NPA ratio grew from 1.15% to 1.29% quarter-on-quarter (QoQ). In terms of value, gross NPAs reached ₹6,105.3 crore, up from ₹5,304.4 crore in Q1 FY25, while net NPAs increased to ₹1,620.2 crore from ₹1,396.4 crore.

Operational Performance and Provisions

For the first half of FY25, Bandhan Bank reported an operating profit of ₹3,796 crore, marking a 21% increase over H1 FY24’s ₹3,146 crore. Provisions (excluding taxes) were reduced from ₹1,238 crore in H1 FY24 to ₹1,129 crore, indicating prudent risk management.

Returns and Capital Adequacy

The bank’s Return on Assets (RoA) and Return on Equity (RoE) for the half-year ending September 2024 stood at 2.3% and 17.3%, respectively. This level of profitability underscores the bank’s effective asset deployment and income generation capabilities.

Bandhan Bank’s capital adequacy ratio, including profits, reached 15.6%, well above the regulatory requirement of 11.5%. This capital buffer is crucial for sustaining growth while managing potential risks.

Net Revenue and Net Interest Margin

As of Q2 FY25, Bandhan Bank’s net revenue was ₹3,543 crore, representing a 19% increase from ₹2,984 crore in Q2 FY24. Additionally, the bank’s Net Interest Margin (NIM), a measure of the profitability of lending operations, improved to 7.4% compared to 7.2% in the same period last year.

Stock Performance and Market Capitalization

Bandhan Bank’s shares are currently trading at a price-to-earnings (P/E) multiple of 10.54, with an earnings per share (EPS) of ₹15.97. As of Monday morning, the stock was up 9.12% at ₹183.65 per share on the BSE, while the BSE Sensex rose 1.05% to reach 80,237.05 points. The bank’s market capitalization stands at ₹29,585.48 crore, reflecting strong investor interest and confidence.

Conclusion

In summary, Bandhan Bank’s Q2 FY25 results highlight strong profit and revenue growth, underpinned by a solid increase in Net Interest Income. Despite rising non-performing assets, the bank maintains a robust capital adequacy ratio, supporting its resilience and long-term stability. Stakeholders may want to monitor the bank’s strategies for managing asset quality as it pursues sustained profitability and growth.