Bandhan Bank Limited

Bandhan Bank reported gross advances of INR 1.34 lakh crores, a 6% YoY growth, while total deposits grew 16% YoY to INR 1.55 lakh crores. The EEB portfolio, however, declined 15% YoY and 7% QoQ. Net Total Income stood at INR 3,483 crores, with operating profit at INR 1,668 crores, a 6% sequential increase. PAT for the quarter was INR 372 crores, significantly lower than INR 1,063 crores in Q1 FY25, resulting in an ROA of 0.8% and ROE of 6%.

Asset quality remains a top priority, with credit costs showing moderate sequential improvement to 3.5% from 3.9% in Q4 FY25. Gross slippages declined to INR 1,553 crores from INR 1,748 crores in the previous quarter, primarily driven by the EEB segment. However, Gross NPA stood at 5.0% and Net NPA at 1.4%, slightly higher than the previous quarter, partly due to technical write-offs of INR 1,047 crores. The bank's overall collection efficiency, excluding NPA, was 97.7% for Q1 FY26.

Total deposits grew robustly by 16% YoY to INR 1.55 lakh crores, outpacing advances growth and reflecting a strategic focus on liability franchise strengthening. Retail term deposits showed strong momentum, growing 34% YoY. CASA deposits, however, declined 12% QoQ to INR 41,858 crores due to Q1 seasonality and a reduction in savings interest rates. The bank undertook strategic measures to reduce the cost of deposits by lowering interest rates, leading to a 19 basis points sequential reduction in the cost of funds.

The EEB segment continues to face challenges, with its portfolio declining 15% YoY and 7% QoQ. Management anticipates these challenges to persist until Q2 FY26, with a gradual and steady recovery expected in H2 FY26. Disbursals in the EEB segment are projected to grow 10-15% from Q3 onwards, lower than previous high growth rates. The bank emphasizes strict adherence to guardrails 2.0, which has led to moderated disbursals and increased rejection rates (16-18%) for customers not meeting norms.

NIM for Q1 FY26 stood at 6.4%, a decline from 6.7% in Q4 FY25. This moderation is primarily attributed to an increased proportion of secured loans, reduction in the CD ratio, and the impact of recent repo rate cuts. However, the decline was partially offset by a 19 basis points sequential improvement in the cost of funds due to rate reductions on savings deposits. Management expects NIM to moderate further in the next quarter but anticipates stabilization in H2 FY26, supported by improving slippages and continued focus on other income and CASA growth.

The bank is strategically diversifying its portfolio, with the secured book growing 29% YoY and now constituting 52% of total advances. Non-EEB portfolio grew 27% YoY, driven by retail assets (78% YoY growth), wholesale banking (32% YoY growth), and housing (15% YoY growth). Initiatives include enabling all 4,400 banking units to offer retail term deposits, with over 2,000 units already active. The 'ONE BANDHAN' initiative generated INR 4,200 crores in incremental retail term deposits, and new products like Elite and Elite Plus Savings Accounts were launched for HNI segments.