Answers some questions on why customer loyalty is very high in Bandhan.
Disc. Invested
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Disclosure : This is not investment advice please do your due diligence before investing. i am invested.
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Disclosure Second Largest Holding in Portfolio
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Not so great set of numbers by bandhan bank.However, micro-finance business has been badly impacted and collection efficiency hasnt been the best.
Disclosure-largest holding
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Finding this slide important as reflect intent of customers to pay back dues.
Views welcome
Disc. Invested
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Bandhan offers 7.15% on savings bank account with daily balances above 50cr.
Basically 50cr balance customers are UHNIs & corporates .
In current high liquidity environment, even competitors like IDFC First, Indusind have reduced their rates. Yet, Bandhan didnât.
Infact, even Bandhan is flushed with cash- their (Deposit+Equity)/(credit) crossed well above 105%.
One Red flag can be,
Bandhan promoter entity received 10000cr in Aug 2020, after the sale of their 20% stake in the company.
They might be holding this cash with Bandhan bank & prioritising their interest rather than that of the minority shareholders.
One way to find out is through the related party compliance disclosures - which I couldnât find as yet.
If someone found the related party disclosure please post here.
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Net profit fell 32% year-on-year to Rs 373 crore in the quarter ended June, it said in an exchange filing. Analysts polled by Bloomberg had estimated the metric at Rs 275 crore. The Kolkata-based lenderâs net interest income, or core income, rose 16.7% to Rs 1,811 crore compared with the Rs 1,977-crore forecast.
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Stock seems to be heavy fall over the past week and at CMP 264 is almost back to its 1 year ago price. Any particular reason? Seems high provisions for NPA - Do you think this should be factored as an issue or should consider that as a safety net that can get cleared if recoveries are good ?
Disc: Invested from last year in chunks - about 10% of pf
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Strong Deposit growth & collection efficiency is improved .
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Very high provisions. collections improving (due to arrears) but accelerated provisions are indication of on ground situation.
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Sir what does increase arrears means?
Collection efficiencies can be calculated in many ways. If customer is paying a money to bank, that can be one of this
- This month EMI
- He did not pay previous months emi and he is paying that now (Arrears)
- He may future EMIs (Pre-payment).
So when looking into collection efficiency, if they say including arrears then that means they are calculating efficieny with payments which were not paid in past, but paid in current time period
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What does one should infer from it ?
Collection Efficiency Including NPA 86 % - Meaning 14% of loan they arenât able to collect (outstanding > 90 days) ?
Collection efficiency Excluding NPA 93 % - 7% of the loan they still arenât able to collect and havenât yet recognized as NPA yet ?
Collection efficiency including arrears (129%) - Meaning this month they collected 29% more than expectation because what they recognized as NPA has started coming back ?
Based on oct month collection efficiency they think they either will be able to collect all of it ( scenario 1) and scenario - 2 they may end up losing 1000-2000 cr. (Does both look too optimistic ?) ( including 9000 cr of provisions of which 7000cr they have already accounted, so, 2000 cr more extra provisioning will be required ?)
One thing is these are retail loans and some of their customers may have ended up losing business ( livelihood ) due to lockdowns etc and they might be now coming back as economy is opening up.
definitely there has been K - shaped recovery in the economy so far, but these are encouraging sign that now there is much more broad based recovery.
Overall looks like they have to account for Rs 3000 to 4000 cr more as a provisioning if no 3rd wave.
As of now how things stand pandemic looks like will take away 2-3 yrs of their profits.
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the cfo seems very confidentâŚ
the next two quarters will be crucial for us to get a clear picture (provided no third wave)
let us see
I am invested in bandhan bank
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Disclaimer : i am invested in bandhan bank,
this is not investment advice, I am not a sebi registered investment advisor
please do your due diligence before investing