Bandhan Bank Q2 growth overshadowed by asset quality, management issues

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Subscribe to enjoy similar stories. Bandhan Bank Ltd’s stock price reaction to its September quarter (Q2FY25) business update has been muted. Sure, business growth is impressive, but the Street might be worried about the smooth management transition.

Ratan Kumar Kesh, the interim CEO who took charge from Chandra Shekhar Ghosh in July, has got merely a month’s extension. Thus, any future announcement regarding a longer term for Kesh would be keenly watched as he has been with the bank for almost two years. The bank’s advances, including off-book pass-through certificates, grew 21% year-on-year to ₹1.3 trillion in Q2.

Bandhan has rarely faltered in lending growth even though asset quality challenges remain. Deposit growth was 27% year-on-year to ₹1.4 trillion. With loan deposit ratio (LDR) at 92%, there is no pressure on the bank to shore up deposits or reduce assets.

Also Read: Deposits outpace loans in relief for private banks The banking sector is grappling with issues of liquidity coverage ratio (LCR), which is mandated at 100%. This means that banks must have enough high-quality liquid assets (HQLA) to cover their expected net cash outflows over a 30-day period of financial stress. After adjusting for the revised parameters and simulating multiple scenarios, CareEdge Ratings expects the median LCR of banks to drop and stay in the range of 117-122%.

In this context, Bandhan’s LCR at 162% is comfortably higher than most other banks. Though the deposit growth appears healthy, bulk deposits were up 58% year-on-year, whereas the relatively more stable retail deposits rose by 16%. According to the revised definition by RBI circular issued in June, bulk deposit is defined as a single deposit of more than ₹3 crore (earlier