Bandhan Bank's weak Q4 prompts Jefferies estimate cut, Nomura urges caution
Published on 02/05/2025 09:28 AM
Bandhan Bank's weak Q4 prompts Jefferies estimate cut, Nomura urges cautionJefferies cut its estimate by 7-10% but maintained a 'Buy' rating, raising its target price to ₹195 from ₹185.By Anshul May 2, 2025, 9:28:37 AM IST (Published)2 Min ReadBrokerages trimmed earnings estimates for Bandhan Bank after Q4 results but stayed optimistic about the lender’s long-term prospects.
Jefferies cut its estimate by 7-10% but maintained a 'Buy' rating, raising its target price to ₹195 from ₹185.
It called Q4 a “weak quarter,” citing high slippages and credit costs due to stress in the microfinance (MFI) portfolio.
Jefferies expects improvements from the second half of FY26 and noted that the bank will benefit from interest rate cuts.
However, it flagged that the ramp-up of non-MFI businesses and digital platforms could squeeze net interest margins (NIMs) and lift costs.
Nomura took a more cautious stance.
It kept its neutral rating with a target of ₹165 per share.
Nomura warned that the bank’s return on assets (RoA) and return on equity (RoE) outlook remains soft. It expects return metrics to stay under pressure in the near term but believes the current valuation already factors in downside risks.
Bandhan Bank reported a 3.6% year-on-year drop in net interest income (NII) to ₹2,756 crore in Q4FY25. Net revenue slipped to ₹3,456 crore from ₹3,560 crore a year earlier.
Operating profit fell 14.5% to ₹1,571 crore.
The bank’s NIM stood at 6.7% for the quarter, while gross and net non-performing assets (NPAs) stayed flat at 4.7% and 1.3%, respectively. However, its CASA ratio—a key indicator of cheap funding—dropped sharply to 31.4% from 37.09% a year ago.
Management warned that credit costs will likely stay high until at least September 2025.
For FY25, Bandhan Bank’s gross advances grew 10% to ₹1.37 lakh crore, and total deposits rose 12% to ₹1.51 lakh crore.
Despite the challenges, the board declared a dividend of ₹1.5 per share. The bank continues to expand, with over 6,300 outlets and nearly 75,000 employees.Continue ReadingCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsBandhan BankJefferiesNomura