Shares of private lender Bandhan Bank rose about 10% on Friday after India’s central bank approved the appointment of its new CEO, which analysts say should provide management stability.
The Reserve Bank of India on Thursday approved the appointment of Partha Pratim Sengupta as CEO and Managing Director of the bank. He will replace Chandra Shekhar Ghosh, who retired in July.
Mr. Sengupta previously held senior management positions at State Bank of India and served as CEO and Managing Director of state-owned Indian Overseas Bank between 2020 and 2022.
Shares of Bandhan Bank rose 9.5 per cent to Rs 205.55 and were last up 9 per cent.
“The appointment of a PSU banker as CEO brings some stability to an organization like Bandhan which has seen departures over the past year,” Suresh Ganapathy, an analyst at Macquarie, said in a note.
Separately, the bank said the National Credit Guarantee Trustee Company had completed an audit of loan applications filed by the lender under a guarantee scheme. After this audit, the amount remaining to be paid to the bank was 3.15 billion rupees ($37.5 million).
The move brings credibility to the bank, which could use the funds to build provisions for troubled loans, thereby increasing its capital base and profits, Jefferies said in a note.
“We believe that the conclusion of the audit, with a relatively clean chit for the bank, will be a breath of fresh air for the street,” CLSA said.
Macquarie said it believed paying the claims implied a 15% rise in its estimate of the bank’s profit for the 2025 financial year, which currently stands at 35 billion rupees.
Bandhan Bank, which has seen a high formation of bad loans over the last two years, said its asset quality had deteriorated with the gross non-performing assets ratio increasing to 4.23 per cent at the end of the month. in June, compared to 3.84% three months earlier.
Its shares have lost about 15% since the start of the year, compared with a roughly 7% rise in the Nifty banking index.
($1 = 83.9775 Indian rupees)
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