Mutual Fund Advisor
Bandhan Bank Limited
Bandhan Bank’s strength lies in microfinance, including a network of 2,633 Doorstep Service Centers (“DSCs”) and 9.9 million micro loan customers as of December 31, 2017. They launched their general banking business on August 23, 2015 by opening a greenfield network of 501 bank branches and 50 automated teller machines (“ATMs”), which as of December 31, 2017 they have grown to 887 bank branches and 430 ATMs, together serving over 2.1 million general banking customers. Their distribution network is particularly strong in East and Northeast India, with West Bengal, Assam and Bihar together accounting for 56.4% and 57.6% of their branches and DSCs, respectively, though their focus is to expand across India.
Bandhan has built a strong base of current account and savings account deposits, which together stood at Rs. 8,401.9 crores as of December 31, 2017, a CASA ratio of 33.2%. Their CASA ratio provides them a stable source of low-cost funding, allowing them to provide cost-effective loans to their target customer base.
As of December 31, 2017, 96.5% of their Gross Advances were in Priority Sector Lending (“PSL”) compliant with the Reserve Bank of India (“RBI’s”) PSL requirements. Because their PSL portfolio significantly exceeds the RBI’s PSL requirements, Bandhan generate PSL certificates that they can sell to other banks, providing them with an additional stream of non-interest income.
As of December 31, 2017, their deposits and Gross Advances (including IBPC/Assignment) stood at Rs. 25,294 crores and Rs. 24,364 crores, respectively. For the 9 months ended December 31, 2017 and 2016, they had Net Interest Margins (“NIMs”) of 9.9% and 10.3%, Return on Equity (“RoE”) of 25.6% and 27.9% and Return on Assets (“RoA”) of 4.1% and 4.4%, respectively (each on an annualized basis).
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