Bandhan Bank Q4 FY24 results paint a mixed picture for investors. While net profit for the quarter ending March 2024 (Q4FY24) witnessed a steep decline of 94% compared to the same period last year, falling to ₹54.6 crore, there’s a bright spot. The bank’s Net Interest Income (NII), a key indicator of its core lending and borrowing activity, grew by a healthy 16% year-over-year.
What’s causing the profit drop?
The significant decline in net profit can be attributed to increased provisions and write-offs for bad loans during the quarter. This suggests the bank may be facing challenges with non-performing assets.
Core Business Looks Strong
Despite the profit drop, the positive NII growth is a welcome sign. It indicates that Bandhan Bank’s core business of lending and taking deposits is functioning well. This can be seen as a positive long-term indicator for the bank’s health.
Market Reaction and Investment Outlook
The market is likely to react negatively to the sharp drop in net profit in the short term. The stock price has already dipped by around 5.3% on May 17th, 2024, compared to the previous day’s closing. Additionally, the stock has been underperforming for most of 2024, currently down around 21% year-to-date.
Analysts may recommend holding or even selling the stock in the immediate future. However, the strong NII growth suggests the bank’s underlying business is fundamentally sound. Long-term investors might see this as a potential buying opportunity, considering the bank’s ability to generate healthy income.
Stay Informed: Keep an eye on future developments
It’s important to stay informed about Bandhan Bank’s future performance. How the bank addresses its non-performing assets and whether NII growth can be sustained will be crucial factors to watch. This will give a clearer picture of the bank’s long-term prospects.