Have done a modified form of this. Taking NIM - Credit costs so we have adjusted NIMs. The size of the bubble is Credit growth. Weak correlation is there.
I will try to put the RoA vs P/B chart. However think like, no bank will be able have credit growth without access to capital. And Capital flows to ones who have better risk management ability and higher risk adjusted return. Now assume if two well run banks have differing credit growth which one will u prefer? HDFC Bank and Kotak command premium because they have done this consistently for last 1-2 decades. While in chart we have 2year averages. Btw most brokers have sell/hold on Kotak because of valuations.
Bandhan looks too aggressive to me. They way they are moving surely they will do away or limit microfinance business. In non secure lending business conservative yet aggressive shall be the biz word not the other way.
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informative article
my view is - bandhan should do very well in the next 5 years.
i feel the stock can be rerated back to its glory days, Once Corona is done and bengal elections (market might be wary of loan waivers) get over next year in april,
uncertainty will reduce
ps : from an esg standpoint bandhan is tops
especially in terms of women empowerment
and 18% annual interest is nothing for borrowers who often sell their goods within a few days or even the same day of procurement
Disclaimer : i m invested in bandhan and my opinions maybe biased, this is not investment advice, i am not a sebi registered investment advisor.
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What’s the idea behind classifying MFI loans as EEB loans ? ( Emerging Entrepreneurs Business )
New Banking rules if implemented would be positive for Bandhan Bank as per the management
Stock looks well poised for growth ahead
It wouldn’t collapse holding company structure as we intend to enter insurance & other businesses’, says CS Ghosh
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Disclaimer : i m invested in bandhan and my opinions may be biased, this is not investment advice, i am not a sebi registered investment advisor.
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Bandhan widens it acquisition hunt to foray into life insurance
Bandhan Financial Holdings, the promoter of Bandhan Bank, has
widened its seek for buying a controlling stake in a life insurance
coverage firm as it has bid for the 51 per cent Reliance Capital’s
fairness shares in Reliance Nippon Life Insurance. The holding
firm is in talks with two more insurance coverage corporations,
exhibiting an urgency for its proposed foray into insurance
coverage. It has signed non-disclosure agreements with these
corporations
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Has anyone noticed the growing Asset Liability Mismatch at 1 yr - 3 yr mark for Bandhan Bank? Here are the details
As per Annual Report of year ending March 2020,
- The Asset Liability Mismatch (ALM), as per Pg: 178 of the annual report, is very high for interval duration of 1 year to 3 years.
- The ALM is constantly increasing for the 1 yr - 3 yr mark over the last 5 years.
While Bandhan Bank has a constant positive Liquidity Coverage Ratio, in the long run does this seem like something that could create some serious trouble specially because the ALM is growing at an alarming rate?
Screenshot of asset liability from the most recent annual report:
ALM mismatch with higher liabilities at 1-3 year mark for each of last 5 financial years:
“()” indicates negative - i.e. higher liabilities than assets.
- March 2016 - (2835)
- March 2017 - (7600)
- March 2018 - (7000+)
- March 2019 - (18032)
- March 2020 - (26511)
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For reference, HDFC Bank has a very decent ALM management with cumulative ALM always ending up positive, here’s the detail:
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Maybe something to ask on the concall?
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This new law passed by Assam Govt is going to be beneficial to Bandhan Bank as it has the reach, strength and required processes in place to gain market share.
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good move to have a mou with the army for special salary account for army personnel
regarding the assam laws, seems like a move in the right direction so as to avoid an andhra type microfinance crisis that happened a decade ago
bandhan should largely be compliant with these already.
in my opinion once both assam and bengal elections are done rerating of bandhan is possible. (or earlier)
Disclaimer : i am invested in bandhan bank this is not investment advice i am not a sebi registered investment advisor
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As the Assam law is for MFI and Bandhan is a bank, the law should not be applicable nor impacting Bandhan. Is the understanding correct.
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Good to see following YoY numbers
Does it indicate that covid impact is washed away & we can expect Bandhan turning back to earlier growth path in upcoming quarters
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The effect of proposed loan waiver to more than 25 lakh MFI loan borrowers in Assam is to be watched carefully. Disclosure: invested
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As per my data, their loan book in FY19 in Assam was 7180 cr. Assume some growth/degrowth over this in FY20 depending on the conference call commentary. Total loan book was 69k cr odd in FY20. Collection efficiency was 61% in Assam in Q1FY21. Bandhan had 60% market share in Assam in FY20.
Not sure whether their loan book will be classified as microfinance. Or whether the regulations will be applicable to banks. Them changing the microfinance book name to EEB(emerging entrepreneur book) could have something to do with this.
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