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Bandhan Bank gets RBI nod for Ghosh’s re-appointment as CEO, MD

RBI has accorded its approval for re-appointment of Mr. Chandra Shekhar Ghosh as the Managing Director & CEO of the Bank for a period of three years on July 4, 2018, with effect from July 10, 2018 till July 9, 2021. The re-appointment is positive for the bank, as under Mr. Chandra Shekhar Ghosh the bank has performed exceedingly well has achieved new heights in terms of its operating performance. We expect the stock to trade with positive bias today.

Bandhan Bank, over the years, has consistently delivered sound financial performance. Bandhan Bank began general banking operations on August 23, 2015. It has India’s largest microfinance lending portfolio with a total loan book size of ~Rs32,340cr and has a deposit base of ~Rs32,340cr as on FY18 end. The advances of the bank are expected to register ~30.5% CAGR over FY18 to FY20E to `52,288cr owing to (a) market share gains in both existing and new geographies, (b) diversifying revenue streams, (c) robust capital adequacy ratio and (d) extensive distribution network of branches and DSCs. The bank is adequately capitalized with CAR at 31.5% in FY18.

Its asset portfolio consists of ~86% in microcredit and non-microcredit forms ~14% for FY18. Its ratio of retail deposits to total deposits has increased from 37.95% in FY16 to 71.9% in FY18. The bank’s CASA ratio has improved from 21.55% to 34.3% over the same period.
Its cost-to-income ratio is also on the lower side at 35% for FY18, (down 136bps yoy) led by low cost model of DSCs and associated banks with focus on digital initiatives. The stock is trading at 4.7x FY20E P/BV. We have positive outlook on the stock.

Bandhan Bank Ltd ended at Rs539.90 down by Rs7.95 or 1.45% from its previous closing of Rs547.85 on the BSE

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