Micro lender Bandhan Bank Ltd showcased the information regarding investors about its resilience amid the pandemic.
The bank officially reported a 23% year-on-year loan growth, which is reportedly higher than the previous quarter. The sequential growth in loans was registered to 5%. This is indeed close to the growth rates that the lender reported in the past years. Moreover, the growth is aided by festival season optimism and the government has guaranteed a scheme that displays the credit risk away for banks.
The sanguine outlook on rural economic prospects for Bandhan Bank on growth asset quality is normal. Whereas analysts are still hoping for an extension of restricting the expectation and the limited damage policy. Improving collection efficiency in the September quarter has been given confidence to the investors.
It has been also reported that Assam and West Bengal are in the elections. The loan waivers have initiated more than 40% of Bandhan Bank’s assets under management that comes from these two states. Analysts at Motilal Oswal Financial Services Ltd. exclaimed that they are expecting LGD to remain lower given Bandhan’s strong market share and higher unique customer base.
It has been noticed that the investors are throwing the big impact of the Micro Finance Institution Bill 2020. The bill has been passed by the Assam state. Moreover, the bill stipulates a cap on the total leverage of microfinance borrowers in the state. This is a term that overhangs Bandhan Bank’s prospects.
The lender has a strict restriction on the previous political uncertainties that indicates a stand and creates a big impact on asset quality which is not acceptable by the committee.
As of now, the investors have positively viewed the quarterly update math. The bank has gained over 2% today and valuations are still in the hand of modest compared with peers.