In Monday’s intra-day trade, shares of Bandhan Bank slid 10% and hit a 10-month low of Rs 244.55 per share after the private sector lender stated a weak operational performance for September 2022 (Q2FY23). The stock dealt at its lowest level in the calendar year 2022.

The private sector lender’s Net Interest Income (NII) was up 13.3% YoY and declined 12.8% QoQ to Rs 2,193 crore amid a margin fall. Net Interest Margins (NIMs) declined by 100 bps QoQ to 7% as yields declined and the cost of funds climbed by 20 bps. Serially, provisions doubled to Rs 1,279 crore, and the net profit for the bank was down 76.4% QoQ and 30% YoY to Rs 209 crore. Asset quality improved as GNPA and NNPA ratios fell by six bps QoQ basis to 7.19% and 1.86%, respectively.

The analysts at ICICI Securities consider that though the balance sheet reshuffle is in progress, the weak performance and ambiguity on the stressed pool remain an overhang. Moreover, the bank reported a PAT of Rs 209 crore in Q2FY23, which was led by weaker operating performance across key metrics such as NII, other income, and operating expenses.

Besides, the analysts at Motilal Oswal Financial Services (MOFSL) rely on the loan growth in the near-term being soft, as the management has stiffened its underwriting standards. They remain vigilant of asset quality, mainly the high SMA book in the Assam portfolio, which can keep credit costs raised. Forecasters have upturned their credit cost guidance for FY23 to 3% from 2.5% earlier.