India's inflation during Q1 suggests limited risk of a further rate hike, says Bandhan Bank MD

economictimes.indiatimes.com:

Bandhan Bank's Q1 results, Managing Director Chandra Shekhar Ghosh, told reporters that India is unlikely to hike interest rates due to the current state of the inflation numbers. «Despite disruption of monsoon, the gradual improvement in rural demand may continue. Despite policy undetainties in advanced economies, India's inflation during the first quarter suggests limited risks of further hike in interest rates,» Ghosh told reporters on Friday.

Unlike its peers, Bandhan Bank has been an underperformer given lower-than-industry growth and asset quality issues. In numbers released on Friday, the bank's standalone net profit fell 19% to Rs 721 crore for the first quarter ended June. The same stood at Rs 886 crore in the year-ago period.

«We have seen a decline in microfinance due to seasonal factors and weather disruptions in few states. The microfinance growth starts during the second quarter amid festive season and will continue till March,» Ghosh added. The fall in profit was steeper than expected as most analysts saw the decline to be around 14%.

For instance, Axis Securities expected the net profit figure to be around Rs 758 crore. In the last one year, the stock has lost about 19%, whereas the sectoral index Nifty Bank has gained 34%. Shares of Bandhan Bank slumped nearly 7% to hit their lowest level in over two months on Wednesday following the news of the resignation of chief financial officer Sunil Samdani.

There was a partial improvement on the asset quality front, with gross non-performing assets (NPAs) falling to 6.76%, against 7.25% in the year-ago period. Net NPAs, however, rose to 2.18% at the end of the June quarter, compared with 1.92% a year earlier. «Share of secured loan continues to increase.