Bandhan Bank Limited

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 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.

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.

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.

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.

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.

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.