Bandhan Bank: Investors should look beyond the headline numbers

Even as asset quality seems stable, factors such as provision coverage ratio and loan book diversification need attention

Bandhan Bank’s stock shed over five per cent on Wednesday, giving up far more than the one per cent it gained post its December quarter (Q3) results published a day earlier. The bank clocking 93 per cent loan growth helped by Gruh Finance acquisition under current condition is laudable. Its asset quality also appears reasonable.

However, investors should look beyond the headline numbers, as aspects such as provision coverage, loan book diversification and profitability do not suggest strength.

At 1.93 per cent gross non-performing assets (NPA) ratio, bad loans have marginally risen by 17 basis points (bps) sequentially, of which