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Bandhan Bank Limited — Q4 FY26 earnings call

Call held 5 May 2026

Management summary

Bandhan Bank reported a strong Q4 FY26, marked by robust growth in advances (13% YoY) and deposits (10% YoY), alongside significant improvements in asset quality with gross slippages declining to INR 1,028 crores. Profitability saw a notable uplift, with NIMs expanding to 6.2% and net profit soaring 68% YoY to INR 534 crores, supported by a healthy capital adequacy of 18.0%. The bank is strategically focused on enhancing its liability franchise, optimizing costs, and achieving its ambitious ROA and credit cost targets for FY27, despite facing some non-recurring expenses and external uncertainties.

Highlights

Gross advances grew 13% YoY to INR 1.54 lakh crores, reflecting strengthening fundamentals across core businesses.
Total deposits increased 10% YoY to INR 1.66 lakh crores, with retail term deposits growing 30% YoY, reinforcing the stability of the deposit base.
CASA ratio improved by nearly 200 bps QoQ to 29.3%, driven by strong sequential growth in current accounts.
Net Interest Margins (NIMs) expanded sequentially to 6.2% as funding costs softened and advances yields improved.
Net profit for Q4 FY26 grew 68% YoY to INR 534 crores, demonstrating improved operating efficiency and underlying profitability.
Capital Adequacy Ratio (CAR) stood robust at 18.0%, with Tier 1 at 17.3%, providing ample headroom for future growth.
Collection efficiency (ex-NPA) improved to 98.9% in March 2026, and gross slippages declined sharply to INR 1,028 crores in Q4, indicating better portfolio behavior.

Concerns

Operating expenses were elevated in Q4 due to non-recurring items, totaling approximately INR 120 crores (INR 60 crores from PSLC costs and INR 50 crores from IT expenses).
Management noted intense deposit competition, with deposit rates going up significantly in March due to competitor offerings.
Uncertainty regarding the potential impact of the Middle East war on the economy, fuel prices, and credit costs.

Key financials

2 periods

Headline

Gross Advances
₹1.54L Cr
YoY +13% QoQ +6%
Total Deposits
₹1.66L Cr
YoY +10% QoQ +6%
CASA Ratio
29.3%
NIM
6.2%
Net Profit (PAT)
₹534 Cr
YoY +68% QoQ +159%
GNPA
3.3%
NNPA
1%
CAR
18%
Tier 1 Capital
17.3%
Net Interest Income (NII)
₹2,796 Cr
YoY +1.4% QoQ +4%
Operating Profit
₹1,441 Cr

Q4

Credit Cost
2%
RoA
1.1%
RoE
9%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	5,500	5,479	5,434	5,476	5,354 −3%	5,431 −1%	5,428 −0%	5,631 +3%
Expenses	2,294	3,281	3,144	2,962	2,977	3,089	2,802	2,849
Other income	609	1,112	700	726	546	691	771	604
Interest	2,566	2,664	2,678	2,718	2,765	2,743	2,633	2,710
Depreciation	0	0	0	0	0	0	0	0
Profit before tax	1,249	645	311	521	158 −87%	290 −55%	764 +146%	676 +30%
Tax rate	25%	34%	-2%	29%	29%	29%	30%	26%
Net profit	937	426	318	372	112 −88%	206 −52%	534 +68%	502 +35%
EPS	5.82	2.65	1.97	2.31	0.69	1.28	3.32	3.11

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
₹53,906 Cr Value23% Share of Advances
Non-EEB Segments
25% YoY Growth
Secured Book
25% YoY Growth56% Share of Overall Portfolio
Small Business and Agri Loans
12% Share of Advances
Wholesale Banking
31% Share of Advances
Housing
23% Share of Advances
Retail Loans
11% Share of Advances
Vehicle Loans
₹5,000 Cr Book Size₹3,000 Cr Commercial Vehicles₹1,700 Cr Construction Equipment₹1,800 Cr Car Loans₹900 Cr 2-Wheelers Loans

Capital allocation

high confidence

Dividend ₹1.5/share (final)

Furthermore, I am pleased to inform you that the Board of Directors has recommended a dividend of INR 1.50 per share, subject to the approval of the shareholders at the forthcoming Annual General Meeting.
Liquidity Liquidity disclosed Period end LCR was around 131%, with average LCR ranging from 130% to 140%. This is supported by a large portion of retail deposits and reduced dependence on bulk deposits.

Our period end LCR was around 131%. Average LCR, I think would have been ranged from between 130% to 140%. (Page 16) ... Yes, I think the, the other factor is that we, we have a large portion of deposits coming from retail. So, our retail deposit share is much larger and that has a much lower run-off factor as you know between a 5% to 10%. We have a lower share from corporate deposits which have a higher run-off factor of 40% or 75% or 100%. Therefore, I think to that extent there will be difference in terms of comparability across the different banks. (Page 20)

Guidance & targets

Profitability

RoA Profitability · by the exit of FY27 · High confidence 1.6%-1.7%

And going forward, as we have been guiding the market, we will be working towards seeing how we can gradually keep on improving the ROA towards the guided level of between 1.6% to 1.7% ROA by the exit of FY27, give or take 10 basis points.

— Rajeev Mantri

Other

PSL Cost Other · FY27 · High confidence down by almost 50%

So, what we have done is that we have revamped our entire credit process in our EEB segment to quality more portfolio in the PSL and also incremental focus on our direct agriculture loans. The effect of these is going to come, as in this year, we are expecting that the PSL cost would come down by almost 50% to what we have incurred in FY26. That is our aim this year. Going forward, next year, it will be almost neutralized or coming to zero.

— Rajeev Mantri
PSL Cost Other · next year (after FY27) · Medium confidence neutralized or zero

— Rajeev Mantri
Secured Mix Other · by March '27 · High confidence 58%

The good thing also is that as we had set up a target of around 58% secured mix by March '27, we are almost near that now itself.

— Rajeev Mantri
Overall NIM plus other income on assets Other · Medium confidence 7.5%

So overall NIM plus other income what we have projected is around 6.0% and 1.5% on assets. I think 6% and 1.5%, so total of 7.5% on assets. So that will remain intact, that is our aim.

— Partha Pratim Sengupta

Credit Growth

Credit Growth Credit Growth · High confidence 14%-15%

So, our guidance remains the same here. We are particularly aiming a growth of around 14% - 15% in the credit.

— Partha Pratim Sengupta

Margin

NIM Margin · next 2 to 3 quarters · High confidence 10 to 20 basis points improvement

As we go through the next 2 quarters, we do expect further improvement because there are further term deposits coming in for renewals. So, we do expect at least another 10 to 20 basis points of improvement over the next 2 to 3 quarters.

— Rajeev Mantri

Credit Cost

Credit Cost Credit Cost · by the exit of FY27 · High confidence 1.6%-1.7%

So, our guidance, we have mentioned was between 1.6% to 1.7% by the exit of FY27, which is by Q4FY27. And we will still endeavour to work towards that.

— Rajeev Mantri

What to watch in Q1 FY27

RoA Trajectory

by the exit of FY27

Current 1.1% (Q4 FY26)

Target 1.6%-1.7%

Why it matters

RoA is a key profitability metric, and management has set a clear target for its improvement.

And going forward, as we have been guiding the market, we will be working towards seeing how we can gradually keep on improving the ROA towards the guided level of between 1.6% to 1.7% ROA by the exit of FY27, give or take 10 basis points.

Risks & concerns

External Geopolitical Events
medium

Uncertainty regarding the impact of the Middle East war on the economy, fuel prices, and cascading effects on other sectors, which could affect credit costs.

Management acknowledged
Deposit Competition
medium

Intense competition in the deposit market, with other banks offering significantly higher rates, could pressure the bank's cost of funds.

Management acknowledged
Non-recurring Operating Expenses
low

Operating expenses were elevated in Q4 FY26 due to approximately INR 120 crores in non-recurring items, including PSLC costs and IT expenditures, though these are not expected to repeat immediately.

Management acknowledged

Q&A highlights

8 direct

PSL Shortfall Neutralization Strategy Direct

So, what we have done is that we have revamped our entire credit process in our EEB segment to quality more portfolio in the PSL and also incremental focus on our direct agriculture loans. The effect of these is going to come, as in this year, we are expecting that the PSL cost would come down by almost 50% to what we have incurred in FY26. That is our aim this year. Going forward, next year, it will be almost neutralized or coming to zero.

Management provided a clear strategy and numerical target for reducing a significant cost item, indicating future profitability improvement.

Asked by Piran Engineer

Operating Expenses One-off Items Direct

So, one is the PSLC cost, the Priority Sector Lending Certificate cost, which as we said that we have taken actions that this should go will get reduced. So, during the quarter, we had roughly around INR 60 crores of increase vs. last quarter that came through because of the PSLC costs. Apart from that, we had an increase in the IT expenses also, which was also amounting to a similar level of around INR 50 crores. Within this, there are a number of items which were more timing-related issues and therefore we don't expect that to get repeated immediately. These two, I think, are a couple of the recurring items, which came through during the quarter, roughly amounting to about INR 120 crores.

Management quantified the non-recurring expenses impacting Q4 profitability and clarified their nature, suggesting these will not recur in the immediate future.

Asked by Zhixuan Gao

ROA Outlook for FY27 Direct

And going forward, as we have been guiding the market, we will be working towards seeing how we can gradually keep on improving the ROA towards the guided level of between 1.6% to 1.7% ROA by the exit of FY27, give or take 10 basis points.

Management reaffirmed a key profitability target and its timeline, providing clear guidance for future performance.

Asked by Zhixuan Gao

RBI ECL Transition Impact Direct

But based on the earlier draft circular in December 2025 portfolio, the transition that we expect is to be roughly around INR 1,250 crores, which as we are allowed to transition it or spread it over 5 years would translate to about INR 250 crores per year impact. Given the latest circular talks about this can be passed through the retained earnings or capital results, we expect roughly 16 to 17 basis points of impact on the CRAR every year for those 5 years.

Management provided specific financial implications of a significant regulatory change, detailing the expected impact on profitability and capital.

Asked by Jayant Kharote

NII Growth vs Advances Growth Discrepancy Direct

One is the advances growth came but that growth was rear-ended, so we will see the benefit of that in the coming quarter. The second is, you know, this quarter had roughly two days less. I think just from a day's count perspective, there is an implication as well. Third is the repo rate reduction that happened in December of 25 basis points, which had an 11 basis points impact on our book, roughly 46% of the book got impacted.

Management explained the reasons behind NII growth lagging advances growth in Q4, providing context for future NII performance and indicating delayed benefits.

Asked by Nitin Aggarwal

LCR Differentiation from Peers Direct

Yes, I think the, the other factor is that we, we have a large portion of deposits coming from retail. So, our retail deposit share is much larger and that has a much lower run-off factor as you know between a 5% to 10%. We have a lower share from corporate deposits which have a higher run-off factor of 40% or 75% or 100%. Therefore, I think to that extent there will be difference in terms of comparability across the different banks. And if you add the non-callable part of the bulk deposits, so retail plus non-callable has got to more than 95%. So, the fluctuation and the volatility is concentrated more on the balance 5%. So that dependence has come down and that has helped us to maintain a better LCR for the day.

Management clarified the structural reasons behind the bank's strong LCR compared to peers, highlighting the strength and stability of its retail-focused deposit franchise.

Asked by Nitin Aggarwal

Company Secretary Resignation Direct

I'll take you offline on this one. There is nothing, it's a personal career advancement, nothing beyond. Yes. So, bank is now I would say much, much more process-driven rather than person-driven. I would say that we should look at it for the day. We have brought many changes in the EEB, rather we have transformed the model of the EEB business and lot of technology and other inputs have been made and Vishal has implemented it very meticulously. It is his personal career growth he has aspired for and we wish him all the best.

Addressed a potential red flag regarding a senior management departure, clarifying it as a personal career move and emphasizing the bank's robust process-driven operations.

Asked by Jai Mundhra

CA Growth Drivers Direct

We had focused on current account affluent segment where we could manage a good growth in the current account at the granular level month-on-month, which has resulted in the total growth, which has happened throughout the year. ... These are small SME customers who have opened the current accounts with us. There is no major seasonality linkage.

Management provided specific drivers for the strong CASA growth, indicating a sustainable strategy focused on granular customer segments.

Asked by Piran Engineer

3 min read 7 chapters

Detailed narrative

Q4 FY26 Performance Overview

Bandhan Bank delivered a strong Q4 FY26, with gross advances reaching INR 1.54 lakh crores, marking a 13% YoY growth, and total deposits scaling to INR 1.66 lakh crores, up 10% YoY. The bank reported a net profit of INR 534 crores for the quarter, reflecting a significant 68% YoY increase. This performance was underpinned by strengthening fundamentals across core businesses and disciplined execution, with operating profit standing at INR 1,441 crores.

Asset Quality and Collection Efficiency Improvements

Asset quality trends were constructive, with gross slippages declining sharply to INR 1,028 crores in Q4, down from INR 1,314 crores in the previous quarter. Overall collection efficiency (excluding NPA) improved to 98.9% in March 2026, up from 98.1% in December 2025. The EEB segment also saw a meaningful reduction in slippages and improved early delinquency indicators, with the 0-90 DPD pool declining to about 3.1% of advances.

Liability Franchise Strengthening and CASA Growth

The bank made significant progress in improving the quality and granularity of its deposits, with CASA growth being strong and the CASA ratio improving by nearly 200 bps QoQ to 29.3%. Retail term deposits showed robust traction, growing 30% YoY, contributing to an overall retail deposit composition of 74%. This strategy involved consciously reducing the share of high-cost bulk deposits, which now account for 26% of total deposits, down from 31% last year.

Profitability and Capital Position

Margins showed an encouraging upward trend, with NIMs improving sequentially to 6.2% due to softened funding costs and improved advances yields. The bank's capital position remains robust, with a Capital Adequacy Ratio of 18.0% and Tier 1 capital at 17.3%, providing ample headroom for future growth. The RoA for Q4 stood at 1.1% and RoE at 9%, reflecting improved operating efficiency.

Strategic Priorities and Outlook

Management reiterated its focus on sustainable, profitable growth, aiming for an ROA of 1.6%-1.7% and credit costs of 1.6%-1.7% by the exit of FY27. Key priorities include deepening customer engagement, enhancing digital journeys, and strengthening the liability franchise. The bank also aims for 14%-15% credit growth and a secured book mix of 58% by March 2027, with an overall NIM plus other income target of 7.5% on assets.

PSL Management and Costs

The bank is actively revamping its processes to improve the quality of its PSL portfolio, particularly within the EEB segment and direct agriculture loans. Management expects PSL costs to decrease by almost 50% in FY27, with an aim to neutralize or bring them to zero in the subsequent year, significantly impacting profitability. This quarter, PSLC costs contributed approximately INR 60 crores to non-recurring operating expenses.

ECL Transition Impact

Regarding the RBI's ECL guidelines, the bank estimates a transition impact of approximately INR 1,250 crores based on the December 2025 portfolio. This translates to an annual impact of INR 250 crores over five years, which can be absorbed through retained earnings or capital. This is expected to result in an estimated 16-17 basis points impact on CRAR annually, though the bank's current provisioning for EEB is already higher than the new requirements.

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