Bandhan Bank Limited

Bandhan Bank reported healthy gross advances growth of 10% YoY, reaching Rs 1.45 lakh crores as of December 31, 2025. When adjusted for the NPA sale, underlying advances growth was even higher at 12% YoY and 6% QoQ. Total deposits also grew robustly by 11% YoY to Rs 1.57 lakh crores, outpacing advances growth. The bank continued its strategic shift towards a more diversified and secured portfolio, with the secured book growing 27% YoY and now constituting 57% of total advances.

Asset quality showed significant improvement during the quarter, largely due to the sale of NPAs and written-off accounts to ARCs. The Gross NPA ratio improved sharply to 3.3%, and the Net NPA declined to 1%. Bank-wide gross slippages decreased to Rs 1,314 crores in Q3 FY26 from Rs 1,590 crores in the preceding quarter, with EEB slippages moderating to Rs 942 crores. Early delinquency indicators also improved, with the SMA0 bucket reducing from Rs 1,582 crores to Rs 1,328 crores, signaling easing forward flows.

The Net Interest Margin (NIM) improved sequentially to 5.9% in Q3 FY26 from 5.8% in Q2, primarily driven by a nearly 20 basis points reduction in the cost of deposits. Management expects this positive trend to continue over the next two to three quarters, with further NIM improvement anticipated from the re-pricing of maturing term deposits. For the nine-month period, NIM remained largely stable at 6.0%.

Net profit for Q3 FY26 stood at Rs 206 crores, a significant decline from Rs 426 crores a year ago. This was primarily due to a one-time^📎 incremental provision of Rs 120 crores towards gratuity, following the notification of new labor codes. Additionally, non-interest income saw a 38% YoY decline, although it improved 27% QoQ. Operating expenses rose 6% sequentially to Rs 1,934 crores, mainly due to this gratuity provision.

While total deposits grew 11% YoY, CASA deposits declined 4% YoY to Rs 42,730 crores, bringing the CASA ratio to 27% of total deposits. This softness was attributed to savings rate reductions and shifting customer behavior, a trend observed across the industry. However, retail term deposits maintained strong momentum, growing over 36% YoY, and the overall retail mix (CASA and retail term deposits) improved to 72%, indicating increased granularity and stability in the liability profile.

The EEB book, while showing an 11% YoY and 3% sequential decline (before normalization for ARC sale), is now stabilizing, with a 2% QoQ growth when normalized. The bank introduced several product enhancements in the group loan portfolio, including 18-month and 36-month tenure options and expanded repayment flexibility with bi-weekly and monthly frequency options. These changes aim to provide more choice, reduce repayment stress, and improve overall collection efficiency, which reached 98.2% for EEB in Q3.

The bank made strong progress on its digital transformation agenda, enhancing its Corporate Internet Banking platform and scaling Merchant Acquiring and Payments capabilities. Key control enhancements were introduced for the EEB portfolio, including real-time SMS acknowledgements for cash collections and a real-time digital dashboard for operations executives. Pilot testing of Bluetooth-enabled portable printers was also initiated to issue instant printed receipts, further reinforcing trust and transparency.