Why Bandhan Bank Share Price is Rising

Sometimes, life feels like a boat ride through choppy waters. Waves of uncertainty toss the vessel around, making it hard to see the shore. Passengers may feel uneasy, but once the waters calm and the boat stabilises, the journey ends on a positive note. The rough moments fade, and all's well that ends well.

Something similar is happening with Bandhan Bank at the moment. Allow us to explain...

Known for its roots in microfinance, Bandhan Bank has grown into a full-service bank offering a range of financial products, from retail and SME loans to deposits. It operates mainly in eastern India, focusing on underserved markets and rural communities.

In 2024 so far, driven by a couple of uncertainties, Bandhan Bank's share price has been on a downward path, slipping by 17.5%.

However, the bank has recently emerged from this slump following a key announcement. Let's explore this announcement to understand what has driven the recovery in Bandhan Bank's share price.

#1 New Leadership Appointment

On 10 October 2024, Bandhan Bank announced the appointment of Partha Sengupta as its new managing director and CEO, with a three-year term starting no later than 10 November 2024. The Reserve Bank of India approved his appointment, and Sengupta accepted the role on 9 October 2024.

Sengupta brings nearly four decades of experience, having held senior positions at leading institutions like State Bank of India (SBI) and Indian Overseas Bank (IOB). His background includes expertise in both retail and corporate banking, as well as leadership in credit management and operational risk oversight.

Experts believe this appointment will provide fresh momentum to the bank's performance. Uncertainties surrounded the bank as it witnessed management exits. In July 2024, its CEO resigned and ever since then an interim CEO has been handling the office.

The new appointment brings in hope for stable management. New CEO's familiarity with West Bengal, one of Bandhan Bank's core markets, is expected to strengthen regional operations and improve growth prospects.

The market has responded positively to this announcement. Investors are optimistic that Sengupta's leadership will improve operational efficiency, stabilise performance, and bring strategic clarity moving forward.

#2 Audit Resolution

Bandhan Bank on 10 October 2024 also received confirmation from the National Credit Guarantee Trustee Company (NCGTC) regarding the outcome of a forensic audit on its loan claims under the Credit Guarantee Fund for Micro Units (CGFMU) and Emergency Credit Line Guarantee Scheme (ECLGS).

These schemes were initiated by the government to provide payment guarantees for loans to small borrowers during the Covid-19 pandemic.

The audit outcome brought clarity to outstanding claims, with NCGTC finalising a payout of Rs 3.1 billion (bn) under the CGFMU scheme. This payout follows the earlier settlement of Rs 9.2 bn in December 2022.

Additionally, NCGTC has allowed Bandhan Bank to re-submit claims worth Rs 3.5 bn under the ECLGS scheme, which were previously held pending the audit's conclusion.

This resolution has removed uncertainties surrounding the bank's financials and eased investor concerns about loan recoverability.

With operational gaps addressed and further claims set for re-evaluation, the market has responded positively, contributing to the recent rise in Bandhan Bank's share price.

What Next?

Bandhan Bank is focusing on expanding both its product portfolio and geographic reach to sustain long-term growth. The bank aims to diversify its advances by increasing the share of secured loans such as housing and commercial banking, which aligns with its strategy to reduce reliance on unsecured microfinance loans. This is expected to help improve asset quality while balancing risk.

Geographic diversification is another priority, with efforts to reduce concentration in states like West Bengal. The goal is to expand further across India, leveraging its extensive network of over 6,300 outlets to serve a broader customer base.

The bank also plans to increase digital penetration by investing in technology and data analytics. This will enhance customer experience, promote cross-selling, and support branch-led sales. As digital banking adoption grows, the bank aims to capture more wallet share from its existing customers and attract new ones.

In the liabilities space, Bandhan Bank has said it will maintain its focus on retail deposits to strengthen its deposit base. CASA deposits will remain a priority to keep funding costs in check. At the same time, new financial products and services will be introduced to meet the evolving needs of customers.

With a healthy capital adequacy ratio of 15.7%, the bank is well-positioned to support its growth plans. Management remains committed to maintaining asset quality by controlling slippages and focusing on recoveries.

How Bandhan Bank Share Price has Performed Recently

In the past five days, Bandhan Bank share price has rallied 8.5%. In the last month, it is down 1.7%.

In 2024, so far its share price has tumbled 17.4%.

The stock touched its 52-week high of Rs 263.2 on 4 January 2024 and a 52-week low of Rs 169.5 on 4 June 2023.

About Bandhan Bank

Bandhan Bank is a banking and financial services company, headquartered in Kolkata.

Bandhan Bank is present in 34 out of 36 states and union territories of India, with 5,646 banking outlets and more than 27.8 million (m) customers.

Having received the universal banking licence from the Reserve Bank of India, Bandhan Bank started operations on 23 August 2015, with 501 branches, 50 ATMs and 2,022 Banking Units (BUs).

For more details, see the Bandhan Bank company fact sheet and quarterly results.

You can also compare Bandhan Bank with its peers:

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To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy investing!

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