Bandhan Bank Limited — Q1 FY27 earnings call

Call held 21 Jul 2026

Management summary

Bandhan Bank delivered a resilient Q1 FY27 with strong growth in advances, deposits, and PAT, driven by diversification into secured and non-EEB segments. Asset quality improved with declining credit costs. However, the bank revised its ROA guidance downwards due to persistent external headwinds, including elevated funding costs and rising technology expenses, which are expected to impact profitability.

Highlights

  • Gross advances stood at INR 1.56 lakh crores, registering a healthy 16% YoY growth and 1% sequential increase.

  • Profit after tax came in at INR 502 crores, representing a strong 35% YoY growth.

  • CASA balances rose to INR 48,479 crores, delivering a healthy 16% YoY growth, and CASA ratio improved sequentially to 29.4%.

  • The secured portfolio increased by 27% YoY and now constitutes 57% of total advances, enhancing diversification.

  • Credit cost continued its downward trajectory and moderated to 1.8% in this quarter, with EEB credit cost at 3.3%.

Concerns

  • ROA guidance revised downwards to 1.2-1.4% by Q4FY27 (from 1.6-1.8%) due to external factors like the Middle East war, unpredictable monsoon, elevated funding costs, and rising technology costs.

  • Operating expenses increased 19% YoY to INR 2,166 crores, largely due to IT costs and annual employee-related expenses, including a one-time INR 61 crores gratuity provision.

  • The 0 to 90 DPD pool in the EEB segment increased to 3.5% from 3.1% in the previous quarter, attributed to temporary holiday-related disruptions.

Key financials

  1. Gross Advances ₹1.56L Cr +16%YoY
  2. Total Deposits ₹1.65L Cr +7%YoY
  3. CASA Balances ₹48,479 Cr +16%YoY
  4. CASA Ratio 29.4%
  5. Net Interest Income (NII) ₹2,921 Cr +6%YoY
  6. Net Total Income ₹3,524 Cr
  7. Operating Profit ₹1,358 Cr
  8. Profit After Tax (PAT) ₹502 Cr +35%YoY
  9. ROA 1%
  10. ROE 7.7%
  11. NIM 6.2%
  12. Credit Cost 1.8%
  13. Gross NPA 3.1%
  14. Net NPA 0.9%
  15. Provision Coverage Ratio (PCR) 71.1%
  16. Capital Adequacy Ratio 18.2%
  17. Tier 1 Capital 17.5%
  18. Gross Slippages ₹1,079 Cr
  19. Operating Expenses ₹2,166 Cr +19%YoY

What they filed

Q1 FY27: revenue up 2.8%, net profit up 34.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue5,500 5,479 5,434 5,476 5,354 −3%5,431 −1%5,428 −0%5,631 +3%
Net profit937 426 318 372 112 −88%206 −52%534 +68%502 +35%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • EEB Portfolio
    ₹52,641 Cr Advances23% Share of Advances3.3% Credit Cost
  • Non-EEB Portfolio
    27% Growth66% Share of Overall Loan Book
  • Secured Portfolio
    27% Growth57% Share of Total Advances
  • Retail Assets
    45% Expansion
  • Wholesale Banking
    38% Growth33% Share of Advances
  • Housing Finance
    22% Share of Advances
  • SBAL
    11% Share of Advances
  • Retail & Other Loans
    11% Share of Advances

Capital allocation

high confidence
  • Liquidity Liquidity disclosed LCR maintained at 140% with a CD ratio of 94%. INR 30 crores FCNRB mobilized.
    So liquidity for the bank remains comfortable. I can say even with a CD ratio of 94%, we maintained a LCR of 140%, which is quite comfortable for the bank. As regarding FCNRB, we have mobilized INR 30 crores.

Guidance & targets

Profitability

  • ROA Profitability · exit of Q4FY27 · Medium confidence 1.2% to 1.4%

    Previously 1.6% to 1.8% → 1.2% to 1.4%

    Based on this visibility available, we believe an ROA in the range of 1.2% to 1.4% of the exit of Q4FY27 would be probable.

    — Partha Pratim Sengupta

Credit Growth

  • Overall Credit Growth Credit Growth · full year FY27 · High confidence 14%
    On the credit growth, what we had guided was for the full year FY27, we were looking at a 14% growth rate

    — Rajeev Mantri

  • EEB Credit Growth Credit Growth · full year FY27 · High confidence 5% to 10%
    within which EEB, we were looking at between a 5% to 10% growth

    — Rajeev Mantri

  • Non-EEB Credit Growth Credit Growth · full year FY27 · High confidence 20% plus
    and non-EEB would be 20% plus.

    — Rajeev Mantri

Portfolio Mix

  • EEB Share of Total Loan Book Portfolio Mix · ongoing · High confidence 33% to 35%
    We'll go to one-third that is 33% to 35% of EEB book and 65% non-EEB book.

    — Partha Pratim Sengupta

  • Unsecured vs Secured Mix Portfolio Mix · ongoing · High confidence 40% unsecured, 60% secured
    So, the strategy remains the same - 40% unsecured and 60% secured.

    — Partha Pratim Sengupta

Credit Cost

  • Credit Cost Credit Cost · ongoing · High confidence 1.6% to 1.8%
    And therefore, our credit cost guidance of 1.6% to 1.8%, that continues to remain. So we are not changing that.

    — Rajeev Mantri

Operating Expenses

  • Opex to Asset Ratio Operating Expenses · ongoing · Medium confidence around 4.2%
    our guidance was that our opex to asset ratio would be around 4.2%, but we've already seen that it's hovering around 4.3%.

    — Rajeev Mantri

  • Cost to Income Ratio Operating Expenses · from FY28 · Medium confidence taper down
    But yes, then it will come coming down. So I think we were expecting that it should taper down from the FY28.

    — Partha Pratim Sengupta

PSL Compliance

  • MFI Book PSL Compliant PSL Compliance · post this quarter · Medium confidence dial up from 40%
    So presently, we continue to be at around 40%. However, we intend to dial that up. And I think we post this quarter, we will be comfortably placed in terms of PSL.

    — Surajit Roy Choudhury

What to watch in Q2 FY27

ROA Trajectory vs Revised Guidance

next quarter
Current 1.0% (Q1 FY27)
Target Moving towards 1.2-1.4% by Q4 FY27

Why it matters

To assess if external headwinds continue to impact profitability and if the bank can achieve its revised ROA target.

Based on this visibility available, we believe an ROA in the range of 1.2% to 1.4% of the exit of Q4FY27 would be probable.

Risks & concerns

  • External Macroeconomic Headwinds

    high

    Ongoing geopolitical developments (Middle East), unpredictable monsoon, elevated funding costs, and rising technology-related costs are factors warranting close monitoring and impacting ROA guidance.

    Management acknowledged

  • Energy Crisis Impact on Microfinance

    high

    The energy crisis is seen as having the greatest impact on the microfinance sector, leading to a cautious approach to EEB growth.

    Management acknowledged

  • Increased Cost of Funds

    medium

    Competition is increasing interest rates on deposits, and savings bank costs have risen by 20-25 bps QoQ, potentially impacting NIM.

    Management acknowledged

  • Rising Technology-Related Expenses

    medium

    Technology-related expenditures have risen due to supply chain constraints and continued investment, with IT costs now around 9.5% of total opex.

    Management acknowledged

  • Seasonal Asset Quality Pressure in Q1

    low

    Q1 traditionally sees seasonal moderation in growth and pressure on asset quality metrics, though impact was less severe this year.

    Management acknowledged

Q&A highlights

7 direct
ROA Guidance Revision and External Factors Direct
So let me first answer your question that I have very clearly stated in my speech that the revise guidance on RoA is on account of the external factors and no internal factors, I would say, has any impact on revising the guidance.

Analyst questioned the revised ROA guidance, and management clarified it's due to external macro factors, not internal issues, which is a key signal for future profitability.

Asked by Sameer Bhise

Liquidity and FCNR Deposits Impact Direct
So liquidity for the bank remains comfortable. I can say even with a CD ratio of 94%, we maintained a LCR of 140%, which is quite comfortable for the bank. As regarding FCNRB, we have mobilized INR 30 crores.

Analyst inquired about the potential for FCNR deposits to offset funding pressures, and management provided specific liquidity metrics, indicating comfort.

Asked by Sameer Bhise

SMA-0 Trajectory and Reasons Direct
It is mostly in the month of April. There were two effects, I can say. One is definitely the election effect of West Bengal. This is one. And number two, the holidays. And consecutively, 3 business days were holidays. so that has impacted our SMA-0 book, while some of them have been repaid also.

Analyst asked about the increase in SMA-0, a key asset quality indicator. Management attributed it to temporary, seasonal factors, reassuring that forward slippage is arrested.

Asked by Jai Mundhra

Retail and Mortgage Growth Slowdown Partial
Somewhat, yes. I can say that a little bit cautious growth. In the housing segment, as you can see for that year, we have done a revamping, completely revamping of our structure. We have segregated the 3 verticals. So definitely, there have been some teething problems, which we were busy in addressing for that year. So, it has affected the housing finance growth

Analyst questioned the slowdown in typically high-growth segments. Management cited a cautious stance and internal restructuring, indicating potential for future recovery.

Asked by Piran Engineer

NIM Outlook and Portfolio Strategy Direct
So this quarter also, despite challenges, we could maintain the NIM at 6.20%. But as I have told you that going forward, there may be some increase in the cost of the funds & cost of the deposits. So that may moderately affect our NIM, but definitely we are working on it. The portfolio mix, the strategy remains the same. We'll go to one-third that is 33% to 35% of EEB book and 65% non-EEB book.

Analyst probed on NIM expansion given microfinance yield hikes. Management acknowledged potential pressure from rising cost of funds but reiterated commitment to a diversified portfolio mix.

Asked by Piran Engineer

IT Cost as Percentage of Opex Direct
Right now, and including the depreciation, it is around 9.5%.

Analyst inquired about the specific proportion of IT costs within overall opex, a key driver of rising expenses, and management provided a specific figure.

Asked by Anand Dama

Wholesale Banking Growth Rationale Direct
I think the fundamental thing is that the wholesale banking book, we are doing the vanilla advance, but that is not our goal. We want to have a wallet share in the corporates. So the entry is through the advances. So right now, definitely, the ROA is less because I have to lend all these big corporates or I would say, the better corporates where the risk is much, much lower for that year at very competitive rates.

Analyst challenged the growth in wholesale banking due to lower margins. Management explained the strategic rationale of gaining wallet share and improving credit quality, despite immediate ROA impact.

Asked by MB Mahesh

Gold Loan Decline Direct
As far as gold loan is concerned, we implemented the new circular of RBI, and we developed the system. As you know, the entire circular was 180-degree change. So that has impacted our initial sourcing in the month of April until mid-May. Now we are back

Analyst asked about the decline in gold loans despite industry growth. Management attributed it to the implementation of a new RBI circular, indicating a temporary disruption.

Asked by Nitin Aggarwal

3 min read 7 chapters

Detailed narrative

Q1 FY27 Performance Overview and Resilience

Bandhan Bank demonstrated significantly better resilience in Q1 FY27 compared to previous years, despite seasonal headwinds. The quarter was marked by a continued focus on balance sheet quality, business resilience, and execution. The bank made meaningful progress across strategic priorities, strengthening its foundation for sustainable growth. Overall profitability performance underscored the resilience of the business model, with PAT growing 35% YoY to INR 502 crores.

Asset Quality and Collections Improvement

Asset quality remained healthy, with Gross NPA at 3.1% and Net NPA at 0.9%. Provision coverage stood robust at 86%. Credit costs continued their downward trajectory, moderating to 1.8% for the quarter, with EEB credit cost at 3.3%. Gross slippages were INR 1,079 crores, with EEB slippages improving sequentially to INR 604 crores. Overall collection efficiency (ex-NPA) was 98.9% in June 2026, with EEB at 98.5%, indicating stability despite temporary factors like April holidays and West Bengal elections.

Strengthening Liability Franchise and CASA Growth

The bank's deposit base reached INR 1.65 lakh crores, growing 7% YoY. This growth was driven by a strong momentum in retail deposits and CASA, reflecting a focus on improving quality and granularity. Retail deposits grew over 15% YoY. CASA balances rose to INR 48,479 crores, a 16% YoY increase, leading to a sequential improvement in the CASA ratio to 29.4%. Bulk deposits declined by 13% YoY, reducing their share to 26% of total deposits, enhancing the stability of the funding profile.

Strategic Diversification and Secured Lending Focus

Bandhan Bank's diversification strategy continues to yield results, with the non-EEB portfolio growing 27% YoY and now contributing two-thirds of the overall loan book. The secured portfolio increased by 27% YoY and constitutes 57% of total advances. Retail assets expanded 45% YoY, led by products like commercial vehicles, construction equipment, auto loans, and gold loans. Wholesale Banking also maintained strong momentum, growing 38% YoY, supported by deeper customer relationships.

Operating Environment and Revised ROA Guidance

The external environment has become increasingly uncertain due to geopolitical developments, unpredictable monsoon patterns, elevated funding costs, and rising technology-related costs. Consequently, the bank revised its ROA guidance for the exit of Q4 FY27 to 1.2-1.4% from the earlier 1.6-1.8%. This revision is primarily attributed to these external factors, which are expected to persist for the next few quarters, influencing the pace of achieving profitability targets.

Impact of Technology Investments on Operating Costs

Operating expenses increased by 19% YoY to INR 2,166 crores, largely due to continued investment in technology and annual employee-related expenses, including a one-time INR 61 crores gratuity provision. The IT cost, including depreciation, is now around 9.5% of total opex, up from 5-6% previously. Management acknowledges these costs are necessary for growth and digital transformation, expecting leveraging benefits in the future, with a target to keep total opex within 10% for mature banks.

Wholesale Banking Strategy for Wallet Share

Despite wholesale banking having inherently lower margins, the bank is actively growing this segment (38% YoY growth). The strategic rationale is to gain wallet share with corporates and build a full ecosystem, including corporate salaries and vendor payments. While the ROA for this segment is lower due to competitive rates for lower-risk clients, it contributes to overall credit quality improvement and diversification, providing a stable revenue stream.

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