Why Bandhan Bank Share Is Falling

05 April 2024:Bandhan Bank's share price has witnessed a significant decline in 2024, and there are several factors contributing to this. Here's a breakdown of the key reasons:

Q3 FY24 Results (February 2024):

1. Missed Expectations: Bandhan Bank's third-quarter results for the financial year 2024 (December 2023) fell short of analyst expectations. This disappointment with the financial performance is a major reason for the falling share price. Here are some specific aspects that might have missed expectations:
2. Lower Profit Growth: Profitability might not have grown as much as analysts had anticipated. This could be due to factors like rising operating expenses or higher credit costs.
3. Stagnant Loan Growth: The bank might not have shown significant growth in its loan portfolio compared to previous quarters.
4. Asset Quality Concerns:  There might have been concerns about the bank's asset quality, reflected in rising non-performing assets (NPAs). This indicates a higher risk of loan defaults, impacting future profitability.

Credit Guarantee Audit (February 2024):

News reports emerged in February 2024 suggesting that the National Credit Guarantee Trustee Company (NCGTC) was auditing Bandhan Bank's loan claims under a credit guarantee scheme. This audit focused on the possibility of "evergreening" or "window dressing" of loans, which are practices to temporarily improve the bank's financial performance without a true reflection of creditworthiness. These reports created uncertainty among investors.

Long-Term Factors:

Change in Management Structure: Following a Supreme Court order in 2020, Bandhan Bank had to sever ties with its microfinance arm, Bandhan Financial Services. This separation might have raised concerns about the bank's ability to maintain its strong grip on the microfinance market, which was a key growth driver.